Sonic Innovations (SNCI) designs, develops, manufactures and markets advanced digital hearing aids, designed to provide the highest levels of satisfaction for hearing-impaired consumers. Capitalizing on its advanced understanding of human hearing, the company has developed patented digital signal processing (DSP) technologies, and embedded them into the smallest single-chip DSP platform ever installed in a hearing aid.

SNCI has been consolidating operations in Europe to reduce operating costs and to focus resources on markets that offer the greatest profitability. Our price target is based on a price-to-sales multiple of roughly 0.6x FY09 sales estimate.? The target is $3.00 per share.

Based on increased risks to growth, we again lowered our FY08 sales and EPS estimates. Managememt previously lowered its FY08 revenue guidance. The company finally gave up on Tympany and the referral concept and instead has expanded its distribution relationships and is acquiring and opening new clinics to help drive meaningful sales growth from new product launches.