Samsung builds giant ships, communication, and navigation gear for cars, they also manufacture processors and memory, despite being best known for their TV’s and smartphones, so why did Wall Street, over react when US medical Company Masimo who is currently taking on Apple, acquired one of the world’s largest sound Companies Sound United.
This week analysts who initially said the deal was “crazy” are now reassessing their reaction to Masimo’s plans to spend A$1.4 billion to acquire Viper Holdings, the parent company of Sound United.
This is a well-run sound Company with some of the best audio brands in the world, so there is no reason that the business cannot operate independently from the medical Company who appear to believe that Sound United can add to their strategy of expanding their share of the Telehealth market
Masimo stock lost a third of its value the day after the patient monitoring tech company announced its acquisition plans last week.
While Masimo’s Nasdaq listed shares are still down more than 26% the company’s stock is struggling to recover after the initial fall, despite no rational explanation being given as to why investors quickly bailed out of the stock, or whether they saw a problem with the operations of Sound United who have some of the best audio brands in the world including Denon, Marantz, Polk Definitive Technologies and Bowers & Wilkins.
Analysts appear to be gaining more perspective over Masimo’s plans to acquire the company behind many of the world’s high-end sound system brands.
“While we understand investors’ consternation over the Sound United deal, we believe that the sell-off was overdone and note that we expect the deal to be highly accretive to EPS, and we believe that investors get a free call option on MASI’s consumer pipeline,” Mike Matson, senior research analyst at Needham & Co., wrote in a note earlier this week.
Matson upgraded MASI from a buy to a hold.
He noted that the expansion of oximetry into lower-acuity settings could also drive growth at Masimo.
Plus, Masimo could receive significant royalties if it wins its patent infringement complaint against Apple before the International Trade Commission.
The ITC could decide by early 2023 whether Apple improperly used Masimo health-monitoring IP in its Apple Watch, according to Matson.
Masimo officials are expected to elaborate on the strategy behind the Sound United acquisition later this year.
But even as Masimo’s stock was falling on Feb. 16, MassMEDIC President Brian Johnson noted on LinkedIn that the reasoning behind the deal seemed obvious to him.
“I think it’s a wearables play for a company that needs more opportunities to put its sensors into use on the consumer side,” Johnson said. “The ear is a perfect diagnostics hub, and we all wear our headphones all the time.”
In a story on Audioholic this week Wayde Robson speculated on the acquisition.
He wrote ‘Obviously, Masimo and Kiani sees benefits in Sound United’s research. This wouldn’t be the first time the medical industry has employed home theatre technology”.
Apple’s Steve Wozniak famously sold his company CL9, through which he designed CORE the first-ever programmable universal remote control, to a medical supply company called Caledon. Caledon used CORE to control X-Ray machines and other medical devices for over a decade after the sale in 1991’ he said.
But what can expect from the union of two very different areas of technology?
He then outlined gear he would like to see from a Masimo/Sound United relationship.
HBO Silicon Valley Voice-activated, multi-zone patient alarms that signals your duty-nurse’s personal assistant, powered by HEOS.
A ground-breaking Denon smart watch that monitors blood composition in ways Liz Holmes of Theranos could only dream about.
Acoustic heart monitoring with Dolby Atmos… “Hear every ventricle in immersive surround to pin-point problem-areas”.
More serious speculation from those in-the-know have pointed to Masimo moving toward direct-to-consumer health monitors, which is an area that may benefit from wireless communication, in-ear technology, and patents that Sound United may already hold. Brian Johnson, President of another medical technology company called MassMEDIC speculated on LinkedIn about the deal.
“I think it’s a wearables play for a company that needs more opportunities to put its sensors into use on the consumer side… The ear is a perfect diagnostics hub, and we all wear our headphones all the time.”
Only time will tell if Sound United’s sale was good for consumers and what will come of its various brands. But if Joe Kiani and Masimo brings half the passion to audio that they bring to helping the sick, Sound United might receive the care it deserves after all.
