Sonova struggles to convince investors with new hearing aids

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[October 14, 2014] By Caroline Copley

ZURICH (Reuters) - Sonova, the world's biggest hearing aid maker, disappointed some analysts on Tuesday with a range of new products that can connect to mobile phones -- but not directly.

Shares in the Swiss company dropped almost 3 percent, as some analysts questioned whether the new products would help the firm recapture market share from rival GN Store Nord, whose Linx device allows users to stream voice and music from their iPhones without the need for an intermediary device.

"It had been speculated that Sonova's new product platform would have been based on the same technology as GN's, 2.4 gigahertz wireless technology, and that GN thereby would lose some of its differentiation from its competitors in the market," said Morten Imsgard, an analyst at Sydbank.

"For the Sonova investors it is a big disappointment, and for the GN investors it is a relief that GN still -- at least for some quarters -- will have products that differentiate them from their competitors."

Sonova said its market research had shown customers preferred a hearing aid that can connect to all cell phones not just one brand, like GN's Linx.

Maarten Barmentlo, head of marketing, said customers typically want their hearing device to last for around five years, whereas they change their cell phone every 18 months.

 



As the ranks of the elderly swell, the hearing aid industry has become fiercely competitive as manufacturers rush to increase the appeal of wearing a device by launching products packed with newer technologies.

Sonova is banking on new devices to help maintain its lead in the industry. Around 70 percent of its hearing aid revenue comes from products that have been on the market for less than two years.

Nonetheless, the Swiss firm has lost market share within a key U.S. government program for military veterans this year to Denmark's GN Resound, a unit of GN Store Nord.

NEW TECHNOLOGY

At an investor and analyst event in Staefa, Switzerland, Sonova presented its new Phonak Venture product and "dual-core chip" technology platform.

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The first product from the platform is called Audeo V, a wireless hearing aid that offers twice the processing power while reducing battery consumption by up to 30 percent.

It works by analyzing incoming sounds and automatically adjusting to provide the best setting for the listening environment.

Sonova has also developed a product called Phonak EasyCall which can be attached to the back of any bluetooth enabled cell phone, including non-smartphones and older devices, and connects to any Phonak wireless hearing aid.

In addition, its RemoteControl app turns a user's smartphone into a remote control that can adjust volume or audio sources.

Shares in Sonova, which have risen 20 percent so far this year, were down 3.2 percent to 139.3 Swiss francs by 0840 GMT, compared with a 0.9 percent decline in Europe's blue-chip equities index. GN Store Nord shares were up 2 percent.

(Reporting by Caroline Copley. Additional reporting by Teis Jensen in Copenhagen.; Editing by Louise Heavens and Mark Potter)

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