Avid continues to sink – another declining quarter

[Marcus Samuel-gaskin]

Maybe they’ll get bought by EditShare.

[Marcus Samuel-gaskin]

Or a coalition of Hollywood Editors & Directors? Keeping the tools in the users hands?

[John Kaley]

Someone still thinks Avid is a good buy as their stock jumped up 20% on Tuesday.

[Gary Hazen]

[John Kaley] “their stock jumped up 20% on Tuesday.”
I think Craig just threw up in his mouth a little bit. Hopefully the share price will plumment so he can feel good again.

[Craig Seeman]

The stock price has no impact on their failing business. A real capital infusion might but the stock is just the casino. Avid could actually be a great value for a buyer but that would mean an entirely new and better managed business plan.

[John Christie]

Maybe Blackmagic will buy them. They seem to be doing well with incorporating “legacy” systems into their world. Imagine a seamless interface between Media Composer and Resolve!

Cheers

John

[John Joyce]

The stock price has no impact on their failing business

The stock price rise could be technical (e.g. the sellers have moved on), but 20 per cent is a lot. Someone could think that there is still a lot of value in Avid.

Or someone could know something. Sorry, have to retract that: in the famous words of John Dean, Richard Nixon’s Counsel, “that would be wrong”.

an entirely new and better managed business plan

Don’t mean to be rude, but like what? Go to the market for more money? Make a courageous move, like lowering prices? Sack the CEO and pray that someone – anyone – can do better?

[Craig Seeman]

[John Joyce] “Don’t mean to be rude, but like what? Go to the market for more money? Make a courageous move, like lowering prices? Sack the CEO and pray that someone – anyone – can do better?”

Business plans aren’t that simple. I’d suggest you research the company. They have a business plan which is failing. They have virtually no debt. They have some valuable assets as well as a marketable name. It appears their management hasn’t been able to turn the company around in something like 7 years. Yes someone could do better. Personally I think they should be sold to a company that can integrate their product line into a complimentary line and market base.

[Tim Wilson]

[Craig Seeman] “I think they should be sold to a company that can integrate their product line into a complimentary line and market base.”

They have 550 products. This is a big part of the problem.

Admittedly, there’s a good number of Pro Tools plug-ins that Avid doesn’t actually develop, but even at the highest level, there’s just too much stuff. Continuing with Digidesign, it isn’t just Pro Tools systems (of which there are more than you think). It’s live mixing, DJ, MIDI controllers. The reference monitors are still in there, so I guess they’re not part of the main M-Audio sell-off, but I haven’t even gotten to Digidelivery or Sibelius music composition software. So in Digi alone, I can see 3 or 4 companies that could buy pieces.

Avid’s video business includes on-air character generators, newsroom automation and newscast control, playout servers, online and nearline shared storage, video and audio studio consoles (TV audio, rather than audio mixing), transmission and distribution automation — it’s a long freaking list that, again, could easily go to 3 or 4 different companies.

And needless to say, we’re talking about a good-sized handful of different and not necessarily related industries.

As hard as they’re getting hit, their market cap at the end of today was $300 million. I know that that’s not a straight correlation to the potential sale price, but how long would it take to return on an investment even half that amount? A quarter? It would take a long time just to wrestle the company down to a manageable size and sell off or kill some of the products and lines to get a little focus.

IMO, the damage that Apple did to Avid had very little to do with FCP bleeding off Media Composer business. It had to do with taking Avid’s eye off the ball. Balls.

Understandable that they wanted to answer competitive challenges, but they spent $80 million CASH for M-Audio, $71 million CASH for Pinnacle that I can’t imagine they returned. There was additional stock in the mix — another $400 millionish based on the then stock price of $62/share. Oops. I have my own reasons for thinking that these were bad ideas, but five months later, the stock was at $35, and has been headed downhill more or less in a straight line since then.

So while it takes money to make money, you can spend an awful lot of money to lose an awful lot MORE money. They’ve basically spent 7 years showing what those parts of the portfolio have been worth even if Avid or a future buyer decides to sell them off.

Of course, maybe as with the Pinnacle consumer business and the heart of the M-audio business, better to throw money-losing ballast overboard to try and keep the ship’s most valuable cargo dry.

Maybe I’m looking at it too hard, but that’s all why it’s hard for me to come up with a couple of realistic paragraphs about how selling the company could actually happen.

Tim Wilson
Vice President, Editor-in-Chief
Creative COW Magazine
Twitter: timdoubleyou

The typos here are most likely because I’m, a) typing this on my phone; and b) an idiot.

[Eric Santiago]

Can Autodesk afford Avid?
Might as well they have the top three 3D apps under their wing.