Chris Potter
Forum Replies Created
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Your R&D point is a great one. Without spending in this area it’s hard for the product portfolio to continue evolving. Without deep pockets it’s hard to invest in this area. Avid faces real constraints in this area. I believe that one of the risk factors that they mention in the annual report is along these lines:
“The market segments in which we operate are highly competitive, and our competitors may be able to draw upon a greater depth and breadth of resources than those that are available to us.”
It’s funny that they don’t mention people as a risk factor. I would be worried about the culture after so many restructuring plans and rounds of layoffs. I do think that if the new CEO decides to restructure in some form he will have to address people’s fears that it’s going to be death by 1000 cuts.
The Final Cut and Adobe pricing is kind of like the icing on the cake, the real pain started with hardware sales. Your point about EditShare highlights the problems they face. There are nimble and innovative competitors in every segment in which they operate. These competitors will continue to erode their pricing power (unless they can invest in R&D and stay far ahead of the curve).
Yes, with the stock price on the decline I wouldn’t rule out other form of private equity play. If hedge funds can take shots at Apple for sitting on cash hoards, then surely they have some thoughts on how they could take out Avid and make a buck. Never underestimate the creativity of investment bankers :).
It will be interesting to see what if some of the class action lawyers that are putting out press releases create more problems and put more pressure on the stock price.
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Hey Craig,
Thanks for reading and sharing my post. Would love to hear your thoughts on where my reasoning is off. It’s a tough story to get straight. I’m not sure that the accounting delay is really going to be the thing that pushes them over the edge, but I do think the clock is ticking in terms of them needing to find a way to unlock the value of the assets. You can only have great products and a losing business model for so long (unless as I think Ron Sussman spelled out on twitter, you are a car company or to big to fail).
– chris