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Soundbite IPO Gets Complicated

NEW YORK (AP) — A patent infringement claim reported Thursday may complicate the planned initial public offering of SoundBite Communications Inc., a provider of automated voice messaging services.

In a Securities and Exchange Commission filing, SoundBite reported allegations that its voice messaging software violates a patent claim filed by Universal Recovery Systems Inc. and may violate patents already owned by Universal Recovery.

SoundBite said it believes the company's allegations are without merit, but warned that its defense against the claims could result in “significant expense and diversion of management resources.”

In a note to investors, Ben Holmes, publisher of research firm Morningnotes.com, said the last-minute claim has delayed the IPO by one day and has led to some “push-back” on the offering price. The deal was expected to price Wednesday.

“These issues tend to muddy the waters and the potential impact is difficult to gauge,” Holmes said in the note.

SoundBite said the disputed patents generally relate to specified methodologies used for systems that automatically connect calling agents to the correct party.

Universal Recovery said it will consider selling the patents and patent application to SoundBite prior to the completion of its IPO. The company has given SoundBite a deadline of Wednesday before it makes a similar offer to a rival company.

In a separate SEC filing on Thursday, SoundBite said it continues to expect the offering to total 6 million shares and price between $12 and $14 each.

SoundBite is offering 4.7 million of the shares and a group of stockholders is selling the remaining 1.3 million.

Assuming an offering price of $13 per share, the company expects to raise about $54.8 million after expenses from the IPO, which will be used to repay debt and for general corporate purposes.

Cowen and Co. and Thomas Weisel Partners are serving as the IPO's lead underwriters. Needham & Co., Cantor Fitzgerald and America's Growth Capital are also underwriting the IPO.

SoundBite plans to list its shares on the Nasdaq Stock Market under the symbol “SDBT.”

peHUB Note: SoundBite has raised around $30.4 million in VC funding since 2000, from firms like North Bridge Venture Partners (46.1% pre-IPO stake), Mosaic Venture Partners (20.8%), Commonwealth Venture Capital (16.4%) and Venture Capital Fund of New England (9.9%). www.soundbite.com