Oh no! What's up at Aureal?

[Johnny Ray]

Wow...I was surprised to see this. Bodes ill for Aureal? I love their stuff.


FREMONT, Calif., March 24 /PRNewswire/ -- Aureal Inc.
(OTC Bulletin Board: AURL), a leader in digital audio imaging, today announced
the resignation of all of its executive officers, including its President and
CEO, Kip Kokinakis, its Chief Technical Officer, Scott Foster, its Chief
Financial Officer, David Domeier, and its Chief Operating Officer and General
Counsel, Brendan O'Flaherty, along with all senior staff members of Aureal.
The Board of Aureal stated that it is seeking replacement or turnaround
management and is considering all necessary actions to either sell the Company
or its assets or wind down the Company.

from http://www.prnewswire.com/

John

[xortam]

Ugly. Now, that's a housecleaning. I'd be very interested to hear what caused this. Fraud?

[Thundrchez]

That's really sad. I really liked their stuff. I especially liked it now that they are doing their own boards & drivers instead of relying on companies such as *sigh* Diamond Multimedia. They were the best competition for Creative Labs out there. They really helped to drive the technology and lower the prices of sound cards.

What are the odds that Creative will jump on this and buy 'em out? How many other sound card players are there left? My Asus K7M mobo came with integrated Yamaha chip.

[DentyCracker]

I suspect Creative Labs will probably be interested in buying

[paulcs]

You may be right. Maybe, God forbid, Diamond will buy them. Then we'll never see another driver update again.

Maybe a Canadian maker of video and network adapters with a lot of cash on hand might be interested. And I don't mean ATI! We'd never see another driver update compatible with Windows again.

I'm just whistling past the cemetary, of course. This doesn't bode well for any of us. Unless someone other than Creative buys Aureal, we just might be screwed.

Paul
paulcs@flashcom.net

[This message has been edited by paulcs (edited 25 March 2000).]

[xortam]

Yeah, I've got a Diamond card ... the MX-300 (plus MX-25). This fiasco gives Diamond an excuse for not supplying new drivers (like they ever were going to anyway).
Creative might face some anti-trust issues by acquiring Aureal. Who knows what this is all about (I haven't tried to look into it)? Maybe this team is going off to start a new company. Would like some more info on what's going on.

[xortam]

Thanks for that post andrei. You got that in right before I submitted my last post. That helps explain things.

[Johnny Ray]

Xortam,

I didn't even think of that. It'd be great if the departing crew did start their own company. I've only been impressed by their work.

As for Diamond, I think we're wise enough from our personal experiences with this company and to steer clear of any of their products. I've been burned by them too many times.

John

[xortam]

Johnny Ray, I made that statement before I saw Andrei's posting which pointed out the financial woes. I liked Aureal's technology but that alone won't do you any good if you can't run a business. The crew that left were the one's responsible for running the company into the ground. Aureal still has the technology, the engineers, and the other grunts that created the products that we favor. One can only hope for a savior to keep the competition alive.

[xortam]

After reading the full press release, it looks like they had a tough go of it. I don't know anything about this company's financial/management history except what I read here so take that for what its worth.

[Thundrchez]

In patent litigation, the only people who win are the lawyers. That really sucks, especially if you are vindicated. You may "win" the trial, but ya gotta pay the lawyers out the yazoo.

[Tom]

Too bad. I personally prefer A3D sound
cards over those from Creative Labs. It
looks like there will be one less choice
down the road.

[paulcs]

The truth of the matter is Aureal lost far more than 6.4 million dollars last year. While it certainly didn't help, and it had to hurt, this is clearly not the root of Aureal's possible demise.

After the 1906 San Francisco earthquake, the city's leadership exagerated the damage caused by the great fires, and downplayed the damage caused by the quake itself. They did this to calm the fears of East Coast investors. You see, you can put out fires. Stopping buildings from falling down, particularly with the technology of the day, is another matter entirely.

Creative will probably not sue Aureal next year.

The sad truth is Aureal has never made money. They grossed many millions of dollars last year, netted nothing, and lost much more. Xortam, I believe, is correct. (I say this with all due respect to Andrei.) There is something wrong with Aureal's business practices. They sold many chips and many boards and lost millions doing it, lawsuit or no lawsuit.

Look at 3dfx. They also decided to "go it alone" recently. And they were quite successful. They sold more retail videocards than anyone and continue to do so. They, apparently, did fairly well in the OEM market as well. And they lost millions doing it. How does this happen?

Again, I think it's just poor management. There's more to running a business than selling stuff. I know this is getting to be more and more of a foreign concept, but eventually, you have to bring in more money that you spend, and it appears Aureal never came close.

It does appear that that Creative's lawsuit was specious and quite possibly strategic. Lawyers, however, are foot soldiers. They rarely make policy. The decision to sue Aureal was made by Creative's upper management, which, I bet, is dominated by MBA's and engineers.

I hope someone with some business sense buys Aureal and turns them around. I've been a customer for a long time, but this will have ramifications on Creative customers too. Creative doesn't keep prices down and provide the support they do because they're nice guys.

Again, I'm afraid we just might be screwed.

Paul
paulcs@flashcom.net

[This message has been edited by paulcs (edited 26 March 2000).]

[DosFreak]

Mabye part of the reason they went under was the low price of their sound cards? To me $99 for a Sound blaster Live! is a good price. I never agreed with the $199 for a Platinum though...that does seem a tad unreasonable. But $99 for a sound card is good.

[Himself]

You have Aureal to thank for the ultra cheap price of the Live! value series, without competition like them, Creative basically has a free rein to charge what they like. At least until another brave soul tries to take them on.

I won't try to guess why Aureal is going under, but more marketing and more functionality and stability in the drivers might have helped them sell more units and possibly raise the pricing. It could be that they just bit off more than they could chew.

All I can say is that I glad I sold my MX300 for a Live! when I did and didn't wait a few months.