Avid’s accounting needs some editing

[Craig Seeman]

Given the stock fall, I suspect investors are expecting some serious rejiggering of some really bad news. It may all be part of their new CEO’s attempt to turn things around. Probably looking for the needle of good financial news in a haystack of decline.

It’s not really about Media Composer or Symphony but how many new ISIS are they selling, how many upgrading, how many are renewing maintenance contracts and are all these numbers shrinking.

I have a hunch the numbers are not good.
And if that trend is continuing how much R&D is going into improving MC/S compared to Adobe or even Apple and their respective Post Production apps?

[Sandeep Sajeev]

It’s a real shame what’s happening with Avid. Hope this new CEO is able to stop the bleeding. The products deserve better.

[Joseph W. bourke]

The products certain deserve better – the company, however, does not. AVID built their market, at least in the corporate broadcast world, by telling the customer what they wanted to hear, then when the technology didn’t do what was promised in the sales pitch, selling the customer up to more expensive features, hardware, and support calls. Our facility was promised HD technology in the Newscutter product, by just adding a board – the board project was killed, and guess who was stuck with a hugely expensive AVID editing and mass storage system (ISIS) which would only do SD…

Joe Bourke
Owner/Creative Director
Bourke Media
http://www.bourkemedia.com

[Craig Seeman]

I think Avid’s business model has always been to up sell hardware and very expensive upgrades.
I don’t think that model works today. My own guess is that they’re selling expensive hardware in a market where there’s declining demand through competition and economic pressures.

When we look at “Hollywood” for example some would see the large number of Media Composers and Symphonies in use. A better question might be how many of those MC/S are being used on Isis vs other storage or how many are being mixed on Pro Tools Hardware vs other DAW hardware. One might even ask about what the “higher end” indy market is using as far as storage and mixing is using. I don’t know the answer (I’m not sure people are asking the question) but I might guess some number are using other hardware and that as such hardware grows in features and is cost effective, that’s where the market is moving.

Fact is, Avid is losing money and it seems a “good” quarter just means a bit less loss rather than a profit.

I can’t help but think the delay is, in part, combing through their records to see any kind of positive trends they might have been overlooking, that they need to exploit. It’s also possible that they’re assessing where they can cut that doesn’t impede growth. Cutting R&D and Sales/Marketing obviously isn’t good. They may be looking to shave operating expenses. Cutting back on long term R&D in favor of short term bring to market features.

I think they’re waiting on the report because as part of the expected very bad financial direction, they need to present a new business model. I think the business model of expensive hardware, expensive upgrades, dependency on maintenance contracts on that, is on the wane.

[Steve Connor]

Presumably any potential benefits they might have got from FCP switchers hasn’t really made much of a difference because most would be software only.

Steve Connor
‘It’s just my opinion, with an occasional fact thrown in for good measure”

[Marcus Samuel-gaskin]

Reading this makes me shake my head…

https://www.glassdoor.com/Reviews/Avid-Technology-Reviews-E2291.htm

[Craig Seeman]

[Steve Connor] “Presumably any potential benefits they might have got from FCP switchers hasn’t really made much of a difference because most would be software only.”

Yes. I’ve read a couple of analysts mention that they felt that Avid’s price cut offer wasn’t a great idea because the lower price further ate into revenue with no obvious gain. It’s not selling hardware.

I do suspect Avid’s reasoning might have been that they’d gain back revenue with the price of software upgrades from all these new Avid MC users. I’m not sure how quickly that brings back the lost profits or even whether it would at all. I wonder what portion of Avid users pay upgrade their software. I don’t know but I just have a personal perception that people stick with versions for some time.

I think Adobe was feeling this “stick with versions” as well. True they’re a software company but Adobe handled it by changes in their upgrade policy as well as introducing the subscription model. I’m not saying that would work for Avid but I do think part of the problem is that Avid doesn’t have a clear and viable business model.

[Craig Seeman]

Avid’s “glassdoor” employee satisfaction rating has been very low for some time.
There’s a good chance that means they have a hard time recruiting and an even harder time keeping valuable employees. I’d think this would have to hurt sales, support, development.

There’s got to be a high level of job insecurity even amongst those who might otherwise want to stay. This is a company that’s done some pretty severe “payroll” slashing. Imagine wondering if the delay may be including a look over by the new CEO to see where they can cut.

I guess one might hope that, given Avid is pretty much debt free (a very good thing) that they might find a way to raise new capital to develop a new product they feel the industry will believe in. That would create jobs. Currently thought it seems Avid is “riding” their debt free situation to buy time in a long spiral down.

[Steve Connor]

[Craig Seeman] “That would create jobs. Currently thought it seems Avid is “riding” their debt free situation to buy time in a long spiral down.”

To being owned by Blackmagic?

Steve Connor
‘It’s just my opinion, with an occasional fact thrown in for good measure”

[Craig Seeman]

[Steve Connor] “To being owned by Blackmagic?”

Yes or, for that matter, anyone else who sees value in Avid knowing they can purchase without being saddled with debt. I’m honestly not sure who else other than Blackmagic at the moment.