Sonic shares surge more than 25% on Rovi buyout news

Digital content software player Rovi increases earnings and revenue guidance

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Shares of Sonic Solutions (NASDAQ: SNIC) were up more than 25 percent in mid-afternoon trading Thursday after the digital media software company announced it has agreed to be acquired by Rovi Corp. for $720 million in cash and stock.

Rovi's offer price of 14.17 a share was 26.5 percent above Sonic's Wednesday closing mark of 11.205. In early trading Thursday, investors briefly pushed shares up to 14.70 before they settled in Thursday afternoon at 14.08, a gain of 26 percent.

Meanwhile, investors were punishing Rovi (NASDAQ: ROVI), which by late afternoon was down 1.62, or 2.8 percent, to 56.74. Acquiring companies, of course, often get slapped by Wall Street for paying more than the market value (or perceived market value) of a property.

For Rovi, any minor stock hit related to the Sonic acquisition is just a speed bump in a very successful year. Through Wednesday, shares of Rovi were up 83 percent in 2010. And after five consecutive quarters of losses, Rovi has racked up four straight profitable quarters.

The company also raised its 2010 earnings guidance to $2.08-$2.12 a share from $2.00-$2.10 a share, and increased its revenue forecast to a range of $538 million to $542 million from a range of $530 million to $540 million.

Rovi, formerly Macrovision Solutions, makes digital entertainment devices and offers services for securing and controlling digital media. Sonic is known for its Roxio line of digital software, including DVD burners.

Chris Nerney writes about the business side of technology market strategies and trends, legal issues, leadership changes, mergers, venture capital, IPOs and technology stocks. Follow him on Twitter @ChrisNerney.

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