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Craig Seeman
SCRI: Avid Ex CEO Now Resigns As Director
on May 21, 2013 at 10:49:42 am

Avid Ex CEO Now Resigns As Director
http://scri.com/avid-ex-ceo-now-resigns-as-director/

Avid has reported via a Form-8K filing with the SEC that ex Chairman and CEO, Gary Greenfield has now also resigned as a director of the company. The statement went on to say that the departure was “not a result of any dispute.”
...
With the date for the 2013 Annual Meeting being delayed beyond the originally anticipated date, Mr. Greenfield has decided to resign from his position as director of the Company so that he could attend to other commitments,

... and three days to go before Avid files a report with their plan to get back into NADAQ compliance (and target how they'll file their report... while the class action vultures hover).



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Craig Seeman
WSJ: Avid Technology to Restate Results Amid Ongoing Review
on May 22, 2013 at 11:18:29 pm

Avid Technology to Restate Results Amid Ongoing Review
http://online.wsj.com/article/BT-CO-20130521-714388.html?mod=googlenews_wsj
Key comments
The digital audio and video technology firm said that a review found that no-charge software updates should have been accounted for as post-contract customer support revenue.
...
financial statements for the first three quarters of 2011 and 2012, and the full-year results for 2009 through 2011 contain errors.
...
Avid's management has concluded that the company's controls over financial reporting were not effective, as of March 2013.



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Craig Seeman
4Traders: Avid Announces Receipt of Second Anticipated NASDAQ Letter and Initial Determinations of Its Accounting Evaluation
on May 22, 2013 at 11:27:04 pm

http://www.4-traders.com/AVID-TECHNOLOGY-INC-8498/news/Avid-Technology-Inc-...

The above in greater detail.



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Greg Andonian
Re: WSJ: Avid Technology to Restate Results Amid Ongoing Review
on May 23, 2013 at 8:48:47 am

...a review found that no-charge software updates should have been accounted for as post-contract customer support revenue.

Meanwhile, Adobe looks on and says to themselves, "See, if Avid had gone to a subscription cloud model, they'd be able to crank out updates as often as they want and they wouldn't be in this mess"

______________________________________________
"Up until here, we still have enough track to stop the locomotive before it plunges into the ravine... But after this windmill it's the future or bust."


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Bill Davis
Re: WSJ: Avid Technology to Restate Results Amid Ongoing Review
on May 23, 2013 at 9:26:42 pm

[Greg Andonian] "Meanwhile, Adobe looks on and says to themselves, "See, if Avid had gone to a subscription cloud model, they'd be able to crank out updates as often as they want and they wouldn't be in this mess"
"


Or,

"See, if Avid had just developed an on-line store that pushes updates regularly to the loyal owners of their software without asking to dip into their pocket each and every month (whether or not there were any updates that might have enhanced the actual value of the software you were using two months ago) like - maybe - I don't know - Apple? - then all those stated "accounting compliance issues" would have disappeared also!

The link between monthly subscription and updateability is imaginary. Apple (and many other software manufacturers including most Apps on your phone - do it constantly.

This is about revenue. Nothing else. And, BTW, there's nothing wrong with it being about revenue. It's the lifeblood of any business. Period.

Know someone who teaches video editing in elementary school, high school or college? Tell them to check out http://www.StartEditingNow.com - video editing curriculum complete with licensed practice content.


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Walter Soyka
Re: WSJ: Avid Technology to Restate Results Amid Ongoing Review
on May 23, 2013 at 9:41:29 pm

[Bill Davis] "The link between monthly subscription and updateability is imaginary. Apple (and many other software manufacturers including most Apps on your phone - do it constantly."

Bill, this point would be debatable by experts with much fancier degrees and much higher hourly rates than we.

A salient quote from an in-depth and Apple-centric SOX article [link]:

"...lots of accountants lined to testify that the law does not specifically require payments for such upgrades, but only forces companies to estimate the value of any post-sale upgrades and withhold the booking of that revenue."

Apple can surely afford to defer FCPX revenue indefinitely without it denting their bottom line, but note that Apple themselves have charged for feature updates on revenue-critical items like iOS devices and laptops.

Walter Soyka
Principal & Designer at Keen Live
Motion Graphics, Widescreen Events, Presentation Design, and Consulting
RenderBreak Blog - What I'm thinking when my workstation's thinking
Creative Cow Forum Host: Live & Stage Events


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Bill Davis
Re: WSJ: Avid Technology to Restate Results Amid Ongoing Review
on May 23, 2013 at 10:12:35 pm

[Walter Soyka] "A salient quote from an in-depth and Apple-centric SOX article [link]:

"...lots of accountants lined to testify that the law does not specifically require payments for such upgrades, but only forces companies to estimate the value of any post-sale upgrades and withhold the booking of that revenue."

Apple can surely afford to defer FCPX revenue indefinitely without it denting their bottom line, but note that Apple themselves have charged for feature updates on revenue-critical items like iOS devices and laptops.
"


I wonder if they were some of the same accountants who "lined up to testify" about how appropriate it was before the whole US economy almost crashed for the credit reporting agencies and home mortgage lenders to be fed out of the same pie?

At some level, all complex system accounting is closer to voodoo than math, IME.

The point is that yes, any business has a fiducdiary responsibility make profits. As much as they can if they want to compete for capital.

But history has also show us that it's extremely easy to sacrifice long term viability in any business in the search for short term profits.

The big question here is whether Adobe's "rent only" strategy - over the long haul - will prove to be the smart play for locking in user revenue streams - or whether faced with the changing models of software consumption (which I think of as the "Costco model" where you try to satisfy customers by offering products that generally place at 60-80% up the quality curve, but at at 40-50% of the way up the price curve) as being something that will increasingly work in software as well.

The oft mentioned Pixelmator (which I was kinda touting here more than a year ago) is a prime, if extreme, example. A large chunk of the capabilities of Photoshop at truly significantly less cost.

And here we are.

It was interesting that Adobe exempted Lightroom from the Cloud model, isn't it? I wonder why? It's the only Adobe Software I use regularly for my still photo work.

I wonder what made Adobe single it out for survival outside the cloud?

Be fascinating to know.

Know someone who teaches video editing in elementary school, high school or college? Tell them to check out http://www.StartEditingNow.com - video editing curriculum complete with licensed practice content.


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Walter Soyka
Re: WSJ: Avid Technology to Restate Results Amid Ongoing Review
on May 23, 2013 at 10:26:59 pm

[Bill Davis] "I wonder if they were some of the same accountants who "lined up to testify" about how appropriate it was before the whole US economy almost crashed for the credit reporting agencies and home mortgage lenders to be fed out of the same pie?"

I generally don't like knee-jerk reaction legislation, as SOX was to the Enron scandal. Even when the ideas are good, a hasty implementation leads to confusion at best and poor unintended consequences at worst.


[Bill Davis] "But history has also show us that it's extremely easy to sacrifice long term viability in any business in the search for short term profits. The big question here is whether Adobe's "rent only" strategy - over the long haul - will prove to be the smart play for locking in user revenue streams - or whether faced with the changing models of software consumption (which I think of as the "Costco model" where you try to satisfy customers by offering products that generally place at 60-80% up the quality curve, but at at 40-50% of the way up the price curve) as being something that will increasingly work in software as well."

Lots of cheap products piggy-back on the more expensive products, which bear the brunt of the costs associated with R&D and creating the market. Put another way, where would Pixelmator be without Photoshop before it?

That's not to say that cheap software can't be innovative -- far from it, and they also have the "advantage of backwardness" of no existing user base at risk that could get scared off by a big change -- but I'd hate to be in an industry where large developers couldn't afford to play.

Walter Soyka
Principal & Designer at Keen Live
Motion Graphics, Widescreen Events, Presentation Design, and Consulting
RenderBreak Blog - What I'm thinking when my workstation's thinking
Creative Cow Forum Host: Live & Stage Events


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Bret Williams
Re: WSJ: Avid Technology to Restate Results Amid Ongoing Review
on May 24, 2013 at 4:07:53 pm

Lightroom is in my cloud. Are they planning on removing it?


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Bill Davis
Re: WSJ: Avid Technology to Restate Results Amid Ongoing Review
on May 24, 2013 at 9:42:08 pm

As I understand it, Lightroom is the one program they've exempted from the "all cloud only" initiative.

I'd love to know why. but as a regular Lightroom user, it'm delighted.

Maybe the digital photography industry is so much bigger than video, that they simply couldn't risk the ire of that huge constituency?

Be interesting to know the thinking.

Know someone who teaches video editing in elementary school, high school or college? Tell them to check out http://www.StartEditingNow.com - video editing curriculum complete with licensed practice content.


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David Lawrence
Re: WSJ: Avid Technology to Restate Results Amid Ongoing Review
on May 23, 2013 at 11:13:48 pm

[Bill Davis] "The link between monthly subscription and updateability is imaginary. Apple (and many other software manufacturers including most Apps on your phone - do it constantly.

This is about revenue. Nothing else. And, BTW, there's nothing wrong with it being about revenue. It's the lifeblood of any business. Period."


Bill, for once you and I are in complete agreement.

_______________________
David Lawrence
art~media~design~research
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Oliver Peters
Re: WSJ: Avid Technology to Restate Results Amid Ongoing Review
on May 24, 2013 at 12:23:21 pm

Actually there could be a link. Right now, with the current App Store model, there is no incentive for Pro Apps to continue developing FCP X. They have your money and new updates don't generate re-occuring revenue from existing customers. They will continue development, because right now they are on a path to do that. Will that be true in a couple of years? Aperture? Logic?

OTOH, If Adobe quits advancing the products, then users will move to other software and drop the subscription. Loss of revenue.

It's not just about revenue, but also incentive.

Oliver

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


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Bill Davis
Re: WSJ: Avid Technology to Restate Results Amid Ongoing Review
on May 24, 2013 at 9:47:18 pm

I'm inclined towards the long held Apple mantra that great software sells hardware.

To be seen as "best in class" with software in any category - and if that software runs exclusively on your companies hardware - software becomes a direct driver of hardware sales.

Didn't Legacy prove this? If you wanted to run FCP for a decade - you had to invest in Mac Hardware. Period. Full Stop.

So Apple has an software continuance incentive that neither Adobe or AVID will likely ever have.

Know someone who teaches video editing in elementary school, high school or college? Tell them to check out http://www.StartEditingNow.com - video editing curriculum complete with licensed practice content.


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Andrew Kimery
Re: WSJ: Avid Technology to Restate Results Amid Ongoing Review
on May 24, 2013 at 3:27:04 pm

[Bill Davis] "The link between monthly subscription and updateability is imaginary. Apple (and many other software manufacturers including most Apps on your phone - do it constantly.

This is about revenue. Nothing else. And, BTW, there's nothing wrong with it being about revenue. It's the lifeblood of any business. Period."


If the link is imaginary then why did Apple used to charge iPod users for feature upgrades that iPhone users (on cell phone subscription plans) got for free and why is Avid going through this internal audit? SOX is real and so are companies attempts to do business how they want while abiding by its regulations.

And why is it only one or the other? Can't it be about accounting procedures, revenue and freeing all their applications from the artificial lock-step of upgrading in unison (ready or not)? Ultimately you are right that everything a business does is comes back revenue. Even Apple's grand re-imagining of what editing could be was little more than a ploy to separate you from your money. ;)




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Bill Davis
Re: WSJ: Avid Technology to Restate Results Amid Ongoing Review
on May 24, 2013 at 10:01:00 pm

[Andrew Kimery] "Even Apple's grand re-imagining of what editing could be was little more than a ploy to separate you from your money. ;)
"


Maybe. But I don't think it's that direct.

My personal opinion is that Apple's engineering teams obviously get clear advanced looks at the state of hardware development well in advance of us mere mortals. Those engineers then get a vision of what can be done with the new technology. So they write for the new possibilities that are emerging.

I think OS-X - plus AV Foundation - plus Core Video - plus Moores Law - plus Thunderbolt - plus the diminishing importance of a lot of tired NTSC video standards based on 1960s broadcast processes PLUS "internet-ification" all came together in a compelling justification for a wholesale re-boot of editing.

Sure it will separate us from our money. If we want to take advantage of improvements in any technology it's likely to separate us from our money. In that sense how is FCP-X different from a modern automobile that gets 32 miles to the gallon? Doesn't THAT makes you want to retire the ride you currently own that gets 12mpg? Same diff.

X is built for the file-based - internet connected world of how video is increasingly done these days.

Built on code that wants a modern CPU and GPU and Thunderbolt class pipes to enable the new ideas.

And yep, that means hardware sales.

As it's always been, as it ever will be.

There will be no Stradivarius class NLE systems that get finer with age.

Ever.

FWIW.

Know someone who teaches video editing in elementary school, high school or college? Tell them to check out http://www.StartEditingNow.com - video editing curriculum complete with licensed practice content.


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Andrew Kimery
Re: WSJ: Avid Technology to Restate Results Amid Ongoing Review
on May 24, 2013 at 11:51:34 pm

[Bill Davis] "Maybe. But I don't think it's that direct."

I don't think it's that direct either (for Apple or Adobe or Avid or Company XYZ).




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David Lawrence
Re: WSJ: Avid Technology to Restate Results Amid Ongoing Review
on May 25, 2013 at 6:26:44 am

[Bill Davis] "My personal opinion is that Apple's engineering teams obviously get clear advanced looks at the state of hardware development well in advance of us mere mortals. Those engineers then get a vision of what can be done with the new technology. So they write for the new possibilities that are emerging."

Unfortunately this is much less true than you imagine. It's a well-documented fact (and I've had this confirmed from insider sources) that Apple's culture of secrecy extends to divisions within the company as much as to the outside. In advanced development, groups may be designing software with no knowledge whatsoever of the ultimate final product. This was the case with the iPhone, for example. Part of the reason for the recent management shakeup - firing Forestall and putting Jony Ive in charge of software design - was to foster an environment of greater collaboration between divisions. Hopefully we'll begin seeing the benefits of this new approach soon. WWDC announcements and demos should offer a clue.

_______________________
David Lawrence
art~media~design~research
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Oliver Peters
Re: WSJ: Avid Technology to Restate Results Amid Ongoing Review
on May 25, 2013 at 12:56:03 pm

[David Lawrence] "It's a well-documented fact (and I've had this confirmed from insider sources) that Apple's culture of secrecy extends to divisions within the company as much as to the outside. In advanced development, groups may be designing software with no knowledge whatsoever of the ultimate final product."

Same here. That was also one of the things people have speculated on in the hiring of Adobe's former CTO. Someone who can look over those bulkheads and provide some guidance across software and hardware divisions.

Getting back to the OP, though - Avid. We all have to remember that this is little more than court intrigue at the palace. The stock situation has little to do with the company's profitability (assuming no actual legal action ensues). Delisting is largely irrelevant. SEC concerns are a different matter, of course.

When a company sells the stock initially, it's made the money by selling ownership in a company. If you sell 1,000,000 shares at $10 each, then in a very simplistic sense, the company has picked up $10,000,000 to work with. If that stock subsequently goes up to $100 each or down to $.10 each, it really doesn't affect the working capital of the company, other than as leverage to borrow. The stock can be in the toilet, but if the company is profitable it doesn't matter. Likewise, if the stock is riding high, but the company is shedding cash, it's also not good. Neither situation brings or removes more actual dollars into the company in a direct sense.

The danger point is when the outstanding value of the stock goes below the actual, tangible assets of the company (things it owns, cash in the bank, receivables, placed orders, etc.). In this simplistic example, if the stock goes to $.01/share, then the value of those 1,000,000 shares becomes $10,000. If the value of actual assets is $500,000, this means you could effectively take over ownership of a company by buying the stock from all the shareholders. You would own the company at a far lower cost than if you were to buy the actual assets.

- Oliver

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


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Craig Seeman
Re: WSJ: Avid Technology to Restate Results Amid Ongoing Review
on May 25, 2013 at 1:18:47 pm

You've made a good key point, I think, about the stock. At some point it's possible some entity can move an aggressive takeover. One option Avid would have would be to buy back the stock and go private.

Another impact the stock can have is employee compensation. If some employees are compensated by stock and it dives, those employees are losing compensation. I don't know what Avid's employee compensation is like (are any compensated by stock?) but it may be something to consider.



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Bill Davis
Re: WSJ: Avid Technology to Restate Results Amid Ongoing Review
on May 25, 2013 at 10:47:20 pm

The only part of the analysis that I'll quibble about is that it ignores the fact that the difference between privately held and publicly traded companies is that the latter, being held as a financial asset by a presumably wide range of institutional investors - is subject to much more informed scrutiny than a private concern.

So even tho the company may get it's 10,000.000 (in Oliver's example) the acceptance of that capitol comes with significant strings. It forces a business entity to make time for all manner of formal checks and balances from demanded participation in regularly scheduled investor earnings report group phone calls to formal stock ratings from Moodys, S&P et al.

I think that has a significant operational effect on any company.

At worst it can drives companies towards short term profit targets to keep wall street happy. Performance metrics delivered NOW are always more reliable and less risky than those pesky "forward looking statements" that the legal teams are so persnickety about.

At best, it can signal "hey look, a bunch of smart people have looked at what we're doing and agree it's a pretty smart path."

Figuring out when the "charismatic leader" is the right bet - and when the stodgier, but well seasoned older business machine is a smarter wager - is the hard part.

Know someone who teaches video editing in elementary school, high school or college? Tell them to check out http://www.StartEditingNow.com - video editing curriculum complete with licensed practice content.


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Oliver Peters
Re: WSJ: Avid Technology to Restate Results Amid Ongoing Review
on May 25, 2013 at 11:05:10 pm

[Bill Davis] " It forces a business entity to make time for all manner of formal checks and balances from demanded participation in regularly scheduled investor earnings report group phone calls to formal stock ratings from Moodys, S&P et al."

Agreed.

- Oliver

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


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Andrew Kimery
Re: WSJ: Avid Technology to Restate Results Amid Ongoing Review
on May 28, 2013 at 6:36:17 am

[Bill Davis] "At worst it can drives companies towards short term profit targets to keep wall street happy. Performance metrics delivered NOW are always more reliable and less risky than those pesky "forward looking statements" that the legal teams are so persnickety about.
"



Agreed. Publicly traded companies are basically valued on growth so they have to keep getting bigger to keep Wall Street happy even if getting bigger isn't in the best long term interests of the company.




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