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Avid’s accounting needs some editing

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Gerry Fraiberg
Avid’s accounting needs some editing
on Feb 26, 2013 at 1:37:11 pm

Thanks to http://www.artoftheguillotine.com/ for this...

http://bostonherald.com/business/technology/technology_news/2013/02/avid_s_...

While all films nominated in Best Editing category were cut on Avid...

The company’s video editing and production software business has “slowly been eroded” by cheaper film editing products such as Apple’s iMovie and Final Cut Pro, said Roger Kay, a Wayland technology analyst.

“If you’re Steven Spielberg, you still need Avid, but how many Spielbergs are out there that need that,” Kay said. “It’s not enough to sustain a market.”



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Craig Seeman
Re: Avid’s accounting needs some editing
on Feb 26, 2013 at 3:04:55 pm

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?



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Sandeep Sajeev
Re: Avid’s accounting needs some editing
on Feb 26, 2013 at 4:32:42 pm

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


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Joseph W. Bourke
Re: Avid’s accounting needs some editing
on Feb 26, 2013 at 5:11:29 pm

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


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Craig Seeman
Re: Avid’s accounting needs some editing
on Feb 26, 2013 at 5:30:46 pm

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.



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Steve Connor
Re: Avid’s accounting needs some editing
on Feb 26, 2013 at 9:09:52 pm

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"


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Craig Seeman
Re: Avid’s accounting needs some editing
on Feb 26, 2013 at 9:26:47 pm

[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.



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Andrew Kimery
Re: Avid’s accounting needs some editing
on Feb 27, 2013 at 12:17:26 am

[Craig Seeman] "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 saw it as an attempted loss leader. I think the hope was that people would buy MC on sale, decide they liked it then expand into Avid hardware. I think the 'stickiness' of FCP Legend has surprised many people. I still see new productions starting up with FCP of old. Crazy.




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Craig Seeman
Re: Avid’s accounting needs some editing
on Feb 27, 2013 at 12:44:15 am

[Andrew Kimery] "I saw it as an attempted loss leader."

I think that was the goal. Apparently it's not working to the extent they hoped for. I'm not sure that a facility with FCP that decided to move to MC due to this pricing, is going to jump in with Isis as well. I'm sure lots of individuals jumped to MC at the low price and aren't even within the Isis target market. I sometimes wonder if they reversed the hook, FCP facility buys Isis and gets a whole bunch of MCs for free (or low cost) might have hit their target a bit better.

I'm kinda thinking EditShare is opening up Lightworks because they have some business plan in mind.



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Chris Harlan
Re: Avid’s accounting needs some editing
on Feb 27, 2013 at 1:57:01 am

[Andrew Kimery] "I saw it as an attempted loss leader. "

That's how I saw it as well--a one time opportunity to regain lost market share.


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Craig Seeman
Re: Avid’s accounting needs some editing
on Feb 27, 2013 at 2:04:28 am

[Chris Harlan] "a one time opportunity"

They've introduced the crossgrade again.

[Chris Harlan] "regain lost market share."

Market share doesn't necessarily equal profits.

That's why I mentioned upgrades... to be clear... to future versions. Apparently that's not working at least to an extent to make Avid profitable.



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Chris Harlan
Re: Avid’s accounting needs some editing
on Feb 27, 2013 at 2:16:08 am

[Craig Seeman] "Chris Harlan] "a one time opportunity"

They've introduced the crossgrade again.
"


I know. Who doesn't. I was just talking about their thinking at the time. They have quite apparently changed their minds several times and in ways that don't scream stability.


[Craig Seeman] "[Chris Harlan] "regain lost market share."

Market share doesn't necessarily equal profits.
"


I'm not arguing that it necessarily does. But it also was/is a possible path to profits. Right?


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Craig Seeman
Re: Avid’s accounting needs some editing
on Feb 27, 2013 at 2:32:34 am

[Chris Harlan] "But it also was/is a possible path to profits. Right?"

It seems like a long shot to me.
I don't think it's related to hardware sales in a significant way. I suspect they may have the same software upgrade problem Adobe might have had but I'm not sure the same solution would work for Avid.

[Chris Harlan] "They have quite apparently changed their minds several times and in ways that don't scream stability."

I agree. It indicates to me they have no clear business plan about this. Of course if they have info that showed the crossgrade actually did result in a profit it might make sense to re-introduce it but I just don't think that's the case. If it were they might point that up in the report that they just delayed indefinitely.

They may be in a damned if you do damned if you don't regarding reporting. Say nothing the stock drops. Report the ugly reality and the stock drops. On the other hand, take time to reassess and see if you can point a credible way forward when you finely do deliver bad news and it could have some positive spin with their new CEO. While I can certainly be speculative, on the surface of it, it doesn't seem good at the moment.



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Chris Harlan
Re: Avid’s accounting needs some editing
on Feb 27, 2013 at 2:39:39 am

[Craig Seeman] "[Chris Harlan] "But it also was/is a possible path to profits. Right?"

It seems like a long shot to me.
I don't think it's related to hardware sales in a significant way. I suspect they may have the same software upgrade problem Adobe might have had but I'm not sure the same solution would work for Avid.
"


I agree. I think Avid's got a hard ride.

[Craig Seeman] "[Chris Harlan] "They have quite apparently changed their minds several times and in ways that don't scream stability."

I agree. It indicates to me they have no clear business plan about this. Of course if they have info that showed the crossgrade actually did result in a profit it might make sense to re-introduce it but I just don't think that's the case. If it were they might point that up in the report that they just delayed indefinitely.

They may be in a damned if you do damned if you don't regarding reporting. Say nothing the stock drops. Report the ugly reality and the stock drops. On the other hand, take time to reassess and see if you can point a credible way forward when you finely do deliver bad news and it could have some positive spin with their new CEO. While I can certainly be speculative, on the surface of it, it doesn't seem good at the moment.
"


Again, yeah. I really enjoy using MC, and its shelf life in my part of the world should be good for a long time, but I'm not putting all my eggs in one basket anymore.


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Marcus Samuel-Gaskin
Re: Avid’s accounting needs some editing
on Feb 26, 2013 at 9:10:49 pm

Reading this makes me shake my head...

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


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Craig Seeman
Re: Avid’s accounting needs some editing
on Feb 26, 2013 at 9:41:49 pm

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.



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Steve Connor
Re: Avid’s accounting needs some editing
on Feb 26, 2013 at 10:08:15 pm

[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"


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Craig Seeman
Re: Avid’s accounting needs some editing
on Feb 26, 2013 at 10:16:55 pm

[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.



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Marcus Samuel-Gaskin
Re: Avid’s accounting needs some editing
on Feb 27, 2013 at 1:12:35 am

What about a coalition of Directors and Editors, "Hollywood" types club together to prevent the tools they rely on from disappearing?


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Craig Seeman
Re: Avid’s accounting needs some editing
on Feb 27, 2013 at 1:59:03 am

[Marcus Samuel-Gaskin] "What about a coalition of Directors and Editors, "Hollywood" types club together to prevent the tools they rely on from disappearing?"

I'm absolutely sure they'd know how to run a video technology business.
On the other hand there's some Executive Producers. Some might even be good at showing no profit no matter how much they made... after they convinced the employees that a profit sharing plan was the way to go.



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