While William Demant and GN ReSound Fought Over Otix, Sonova Widened Its Hearing-Aid Industry Market Lead

As GN ReSound and William Demant battled over who would win the battle to acquire Otix Global this fall, hearing-aid industry leader Sonova stuck to its knitting and on Nov. 16 claimed it has widened its market share lead. But at the same time, all three of the publicly traded hearing-aid manufacturers hinted they have turned the corner after several years of anemic growth in the global recession.

Sonova, parent of Phonak and other hearing-aid brands, reported more than eight percent organic growth in the first six months of its fiscal year in addition to revenue gains from the acquisitions of cochlear implant maker Advanced Bionics and InSound Medical, developer of the “invisible” Lyric hearing aid. With the growth in the global hearing aid market projected at no more than five percent in 2010, Sonova’s growth, powered by a slew of successful new products introduced over the past two years, earned it a substantial increase in market share. However, in the same report, the holding company lowered its earnings forecast for the remainder of the year, disappointing investors looking for earnings growth combined with faster revenue growth in the industry.

In the meantime, William Demant, parent of the Oticon hearing-aid brand, won the battle to take over Otix, the U.S. maker of Sonic Innovations hearing aids. Along with the new revenues from the Sonic Innovations business, William Demant predicted it will “win significant market share in 2010″, with strong sales of the new generation of Oticon Agil hearing aids enabling it to grow faster than the industry average. But coming on the heels of Sonova’s prediction of leaner profit margins, traders who had expected an even more robust report initially reacted to William Demant’s announcement by driving down its shares by 4.3 percent.

While GN ReSound came in second to William Demant in the race to acquire Otix, its parent company GN Store Nord issued an upbeat financial report reflecting positive results from the launch of ReSound’s new Alera family of hearing aids as well as a restructuring of its GN Netcom headset business over the past year.

While the stock market may have had a mixed reaction to the hearing-aid companies’ financial reports, some of the smart money is betting that the hearing industry as a whole will fare better in the coming year than in the past. Morgan Stanley, for one, recommended that clients place their bets on GN Store Nord and William Demant Holding on Dec. 2, when it lifted its recommendation on purchase of their shares from “overweight” from “hold.”

Leave a Reply

Your email address will not be published. Required fields are marked *