Serious Legal Stuff Happening at Avid

[Chris Harlan]

ALL CAPS OUCH

[Charlie Austin]

[Chris Harlan] “ALL CAPS OUCH
“

No kidding. I was actually gonna buy a copy of MC, but maybe I’ll wait ’til they give it away for free as part of the liquidation. 😮

I need to add it to my collection. MC (trial for now), fcp7, fcpX, Pr, Motion, Resolve, STP, Logic, Protools, oh, and Reaper. It’s hard to keep track of all the KB shortcuts, but hopefully I’ll slow the onset of Alzheimer’s…

Anyhoo… I feel sorry for the employees. Know some east coasters who used to work there. Great product, awful management. The “we have no competition / buy expensive hardware” business model ain’t gonna work anymore…

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~”It is a poor craftsman who blames his tools.”~
~”The function you just attempted is not yet implemented”~

[Craig Seeman]

They specialize in class action lawsuits along with civil rights and consumer protection.
They’re also announced they’re investigating Office Max as well relating to their possible sale to Office Depot.

Shark smells blood.

I’m beginning to think maybe Avid should consider buying back and going private.

BTW the “official” reason for Avid postponing the report, Avid Technology said it was evaluating “current and historical accounting treatment related to bug fixes, upgrades and enhancements to certain products which the company has provided to certain customers.”

Awwrighty, seems those bug fixes may have had serious impact on their bottom line. Sure!
“By golly, we’ve been giving bug fixes away for free. We could be charing $199 a pop and that would fix the company right up.”

[Craig Seeman]

[Charlie Austin] “maybe I’ll wait ’til they give it away for free as part of the liquidation. 😮 “

I think when the shares drop down to 99¢ they’re going to offer the share holders the option of cash or a free MC on the buy back.

I see all sorts of wild scenarios occurring . I think Netflix should pick this up as a series. It could rival House of Cards.

Some of the odd things is that the company has virtually no debt so I don’t think a reorganization bankruptcy is viable. I think Finkelstein Thompson’s strategy has been to force settlements rather than drawn out court cases (which can’t be good for Avid). It looks like someone is trying to “force a hand” one way or another.

Unhappy Avid employees might make for the whistleblower they’re looking for. Such employee may have a really tough time finding a job after that so I have a hunch they’ll be value provided to them some way, some how.

Granted if no one steps forward nothing may come of it. Given the excuse for the postponement it sure looks like they have a bit target on them.

[Andrew Kimery]

I’m a financial laymen but could this be related to possible Sarbanes-Oxley violations? I remember a few years ago there was uproar because iPod Touch users had to pay for iOS upgrades where as iPhone users did not and it was because of a regulations in the Sarbanes-Oxley Act.

https://appleinsider.com/articles/09/10/21/inside_apples_iphone_subscription_accounting_changes

[Craig Seeman]

I can see that applying to Avid is if there’s a relation to service contracts which included bug fixes and updates vs others not under contract. Just very speculative though if this might be the relevancy of their looking at bug fixes and upgrades to certain customers.

[Oliver Peters]

Let’s be careful not to convict based on what might simply be a legal firm’s fishing expedition. Taxes and SEC rules are so complex at that level that almost every company can be in violation, depending on how you interpret the rules. The fact that they are asking for whistleblowers sounds like they don’t actually have any information.

While this certainly is not good news, there are plenty of acceptable reasons for Avid’s situation, much of it driven by market forces more so than anything else. The whole issue of how you count bug fixes has to do with SOX rules. When can you charge for a feature release verus a bug fix and when can you claim revenue from those sales. That makes for some pretty complex accounting.

Unlike Apple, they have no consumer cash cows to prop up low-revenue enterprise/pro development. It is believed that Apple has been unable to claim any revenues from FCP X until 10.0.6 because they pre-announced product features outside of a given quarter. That may or may not be true, but few other companies can afford to do that.

Oliver

Oliver Peters Post Production Services, LLC
Orlando, FL
http://www.oliverpeters.com

[Andrew Kimery]

Where’s the fun if we aren’t jumping to conclusions?

[Craig Seeman]

Another Law firm joins in the investigation.

https://www.4-traders.com/AVID-TECHNOLOGY-INC-8498/news/Avid-Technology-Inc-Law-Offices-of-Howard-G-Smith-Announces-Investigation-On-Behalf-of-Sharehol-16368829/

Sharks attracting more sharks.

[Craig Seeman]

https://www.sacbee.com/2013/02/28/5225209/block-leviton-llp-investigates.html

Seems like the law firms are jumping all over this to see if there’s a piece of pie to chew on.