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Franz Bieberkopf
Avid continues ...
on Jan 10, 2014 at 8:45:59 pm

http://www.theflyonthewall.com/permalinks/entry.php/AVIDid1889294/AVID-Avid...

Jan. 7, 2014
"... the company indicated that it has determined that it is unlikely to regain compliance with its SEC filing requirements for continued listing of its common stock on the Nasdaq Stock Market by the previously reported March 14 deadline set by the Nasdaq Listing Qualifications Panel. As previously reported, the company is in the process of restating its financial statements for FY09, FY10, and FY14, and for its quarterly periods ended September 30, 2012 and 2011, June 30, 2012 and 2011, and March 31, 2012 and 2011. The company's cash balance on December 31 was approximately $48M and it had no debt or draw on the available line of credit with Wells Fargo."

Reminder that this ongoing "uncertainty" started last february when they said they needed more time to “evaluate its current and historical accounting treatment related to bug fixes, upgrades and enhancements to certain products.” If I'm correct, they've issued no earnings reports for 2013.

Franz.


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Franz Bieberkopf
Re: Avid continues ...
on Jan 10, 2014 at 8:52:24 pm

http://ir.avid.com/releasedetail.cfm?ReleaseID=818367

Jan 9, 2014
Two new executives:

"Rick Lowenstein has been appointed senior vice president of customer success and professional services, while Mitch Weaver joins as vice president of software development."

Franz.


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Aindreas Gallagher
Re: Avid continues ...
on Jan 10, 2014 at 11:07:56 pm

Tannoy announcement - ding dong

"CRAIG SEEMAN. CALLING CRAIG SEEMAN TO THE DECK."

unsheath that blade Seeman.

http://vimeo.com/user1590967/videos http://www.ogallchoir.net promo producer/editor.grading/motion graphics


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Craig Seeman
Re: Avid continues ...
on Jan 11, 2014 at 2:44:25 pm
Last Edited By Craig Seeman on Jan 11, 2014 at 3:19:09 pm

Die Avid Die!
They are a zombie company.
The Walking Dead.

It would seem their goal is to "involuntarily" go "private"… get delisted so they don't have to do any reporting. I wonder if the strategy is actually to make it difficult for someone to gather stock and buy them out (avoid leveraged buyout or undervalued sale).

Consider how bad of a mess their books would have to be in to have not straightened this out… or that this is deliberate (I speculate).

They don't want the numbers known and they've decided it's better to get delisted. Their lack of debt puts them in a good position to look for a buyer away from the stock market's eyes.

Just wild speculation of course.



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Jeremy Garchow
Re: Avid continues ...
on Jan 11, 2014 at 3:58:23 pm

[Craig Seeman] "It would seem their goal is to "involuntarily" go "private"… get delisted so they don't have to do any reporting. I wonder if the strategy is actually to make it difficult for someone to gather stock and buy them out (avoid leveraged buyout or undervalued sale)."

I was wondering about this.

But then what happens to the people who own Avid shares?

Is this legal or are there penalties involved with simply defaulting with the SEC?


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Craig Seeman
Re: Avid continues ...
on Jan 11, 2014 at 4:14:39 pm

[Jeremy Garchow] "But then what happens to the people who own Avid shares?"

One can still own, buy, sell shares "privately"
I believe the logistics are a bit more difficult though which is why being listed is valuable… but being listed probably makes a leveraged buyout (vs a negotiated buyout) more difficult. I'm also wondering/thinking that being delisted might make it easier to "control" a capital investment (control who the investor is).

Personally I think this is a very deliberate move by Avid to get delisted. If it's simply "messy books" they can't straighten out, that would actually be far worse. I don't think any investor will put money in or buy a company whose books can't be audited and understood when the investor/buyer investigates. If their books are that bad they may truly be "toast" because there's no way they can bring in money that way. That would make the very high risk IMHO.

Basically I'm saying I doubt they're "toast." More likely this is a tactic so they can reconnoiter outside of the public eye. The result is that they'll either get an "infusion" with strings attached or they'll be sold.



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Andrew Kimery
Re: Avid continues ...
on Jan 11, 2014 at 4:16:41 pm

[Jeremy Garchow] "But then what happens to the people who own Avid shares?

Is this legal or are there penalties involved with simply defaulting with the SEC?
"


From what I've read nothing really changes for share holders from a legal standpoint. Avid would still be a public company and share holders would still have their shares and their legal rights associated with holding shares. The big change is that Avid's shares would have to be bought/sold 'directly' (for lack of a better word) through brokers since they won't be available on the stock market anymore. The stock value will take a big hit though because there will be much less interest in a company that's not listed.




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Mark Raudonis
Re: Avid continues ...
on Jan 11, 2014 at 4:20:27 pm

[Andrew Kimery] ""But then what happens to the people who own Avid shares?"

Did you watch, "The Wolf of Wall Street?" THAT'S what happens!



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Craig Seeman
Re: Avid continues ...
on Jan 11, 2014 at 4:24:23 pm

[Andrew Kimery] "The stock value will take a big hit though because there will be much less interest in a company that's not listed."

I'm not quite sure that it'll take a hit given how low it is. I think they avoid volatile market fluctuations. The interest would be "targeted" though. Avid gains a lot more control over the transaction (I believe) and I think that's their motive. My guess is they'll work with brokers to look for targeted friendly investors or a friendly buyer. Again, just my speculation.



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Jeremy Garchow
Re: Avid continues ...
on Jan 11, 2014 at 6:27:13 pm

Thanks, Craig and Andrew.


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Jack Zahran
Re: Avid continues ...
on Jan 11, 2014 at 11:23:23 pm

Since they have not done any financial reporting, their stocks will become a pink sheet company, so the symbol would be postfixed with ".pk" They even drop below the OTC BB, which is a Nasdaq trading firm as well. However, the majority owner of the stock owns the company.

Since they did not declare bankruptcy and they are debt free and still liquid, no creditor exists that can force them into Bankruptcy. Their agreement with Nasdaq was that they would continue timely filings of their 10Qs, quarterly filings. However they failed to do even this simple act. Remember, 10Qs are not audited, so they are not expected to be perfect. The 10K however is, but they were given freedom to stay listed by filing 10Qs until they repaired their accounts.

I'm still doing my due diligence, but some initial theories are:
1. the senior Exec team is involved in a financial scandal, with potential criminal implications.
2. they are hoping to delist to help cover disclosures that can be used against them
3. they are hoping to go private by driving down the price of the stock. The pink sheets are penny stock investors, their current price is too high for them. So the stock would become largely illiquid and prone to huge swings, particularly downward. They can then get additional outside funding and issue a ton of stock to "friendly" investors, who would then use their majority to take the company private. And they can keep putting the profits in their own pockets without anyone watching.

It's not pretty no matter how you look at it.


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Oliver Peters
Re: Avid continues ...
on Jan 11, 2014 at 11:31:40 pm

There's an awful lot of speculation on this thread - and some pretty nasty insinuations - without the slightest shred of evidence. Pure, wild speculation.

- Oliver

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


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Jack Zahran
Re: Avid continues ...
on Jan 11, 2014 at 11:48:03 pm

They didn't file their 10Qs and they already admit to having to restate years worth of AUDITED financial statements, we're talking the 10Ks. That means that an Auditor is involved as well. The executives have to sign off on these statements and take personal responsibility. It's not a minor quickbooks mistake. It's a really serious problem for them, their shareholders and their stakeholders. Their stakeholders are all owners of Avid software, services and hardware.

During this period of uncertainty, there is a danger of a flight of talent to their competitors. Without debt, there is no chance to force a bankruptcy in order to get a trustee in there to protect the assets. This is too well orchestrated for my comfort. Definitely the hands of well paid lawyers can be seen in their current strategy. And, those lawyers are working for the executive bench; shareholders and stakeholders be damned.


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Oliver Peters
Re: Avid continues ...
on Jan 12, 2014 at 12:08:24 am

[Jack Zahran] "It's not a minor quickbooks mistake. It's a really serious problem for them, their shareholders and their stakeholders"

The documents pretty clearly state that the cause is the calculation of income from updates. This requires a recalculation of several years worth of balance sheets. Not a small matter.

[Jack Zahran] "During this period of uncertainty, there is a danger of a flight of talent to their competitors."

I doubt there is any more flight than caused by the normal competition from Avid, Adobe, Harmonic, Quantel, Chryon, etc.

- Oliver

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


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Jack Zahran
Re: Avid continues ...
on Jan 12, 2014 at 1:37:16 am

"The documents pretty clearly state that the cause is the calculation of income from updates. This requires a recalculation of several years worth of balance sheets. Not a small matter."

So why didn't they at least keep up with their 10Qs? It belies a more serious problem, it raises the suspicion that "recalculation" was a cover to hide something worse. It doesn't take a year to put update income into a spreadsheet and apply a different schedule to them.

Did the publish the Auditors report on the problem?


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Craig Seeman
Re: Avid continues ...
on Jan 12, 2014 at 1:38:48 am

[Oliver Peters] "I doubt there is any more flight than caused by the normal competition from Avid, Adobe, Harmonic, Quantel, Chryon, etc."

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



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Craig Seeman
Re: Avid continues ...
on Jan 11, 2014 at 11:51:11 pm

Actually in lieu of "less wild" speculation, it seem like very realistic speculation.
I'm not as included to think there's so much duplicity as much as "CYA" going on.

but

[Jack Zahran] "They can then get additional outside funding and issue a ton of stock to "friendly" investors, who would then use their majority to take the company private."

this seems reasonable.

Given how long this has been going on (closing in on a year at least), this is not likely to be a minor "oopsy" accounting issue. Either there's a serious problem or there's a calculated tactic.

I don't believe professional accountants and auditors would take this long unless the issue was major and no company would normally want it to take this long (unless maybe they have a motive).



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Oliver Peters
Re: Avid continues ...
on Jan 11, 2014 at 10:14:30 pm
Last Edited By Oliver Peters on Jan 11, 2014 at 10:15:40 pm

[Craig Seeman] "Die Avid Die!
They are a zombie company.
The Walking Dead."


But why do you care? You clearly don't appear to have any vested interest in whether they survive or not. I just don't get it.

- Oliver

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


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Craig Seeman
Re: Avid continues ...
on Jan 11, 2014 at 11:35:29 pm

[Oliver Peters] "But why do you care?"
Not only a former Avid editor for more than a decade but also trainer and engineer at Avid facilities for a time.

I feel they're going to send their users into a lot of turmoil in the next couple of years and I suspect we're all going to be impacted by that fallout.



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Oliver Peters
Re: Avid continues ...
on Jan 11, 2014 at 11:38:53 pm

[Craig Seeman] "Not only a former Avid editor for more than a decade but also trainer and engineer at Avid facilities for a time.
"


Given that, "die, die" seems to be an strange sentiment.

[Craig Seeman] "I feel they're going to send their users into a lot of turmoil "

I don't agree, although I see how that could be possible.

- Oliver

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


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Craig Seeman
Re: Avid continues ...
on Jan 12, 2014 at 12:03:00 am

[Oliver Peters] "Given that, "die, die" seems to be an strange sentiment."

Humorous response to Aindreas.

think Jack is close to the truth and I'm not even implying that sinister a motive. I do think what they're doing is calculated. I can't honestly see otherwise.

[Oliver Peters] "I don't agree, although I see how that could be possible."

Whenever there's a sale, depending on who the buyers are, they're going to be a lot of concerns. Whether investors or outright sale, there's going to have to be a major change in their business model and I can't help but think it's going to hurt their current customers and I don't mean Media Composer users in that regard either as it's not their major source of income.

Avid's hardware, service contracts, customer base is obviously extremely valuable… yet under Avid's current business model, not profitable. There's no magic "sell more" button for them that will turn this ship around.



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Oliver Peters
Re: Avid continues ...
on Jan 12, 2014 at 12:16:16 am

[Craig Seeman] "Whenever there's a sale, depending on who the buyers are, they're going to be a lot of concerns. Whether investors or outright sale, there's going to have to be a major change in their business model and I can't help but think it's going to hurt their current customers and I don't mean Media Composer users in that regard either as it's not their major source of income."

Could all be true. Too early to tell. I would add that there is just about no company that we deal with, which is exclusively in the film/broadcast/TV business, that is a public company. Avid is just about the only one. Every other company (Apple, Adobe, Sony, Panasonic, etc.) that is a publicly-traded company is not dependent on us. Other companies (Grass Valley, Quantel, RED, etc.) are either private or owned by private investment groups. Clearly a tough position to be in.

- Oliver

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


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Jack Zahran
Re: Avid continues ...
on Jan 12, 2014 at 1:50:12 pm

"think Jack is close to the truth and I'm not even implying that sinister a motive. I do think what they're doing is calculated."

I found something quite shocking in the latest filing. They plan to spend 35 Million of their 45 million in cash to continue trying to restate their accounts due to wrongly classifying upgrades. They say that it's because of the number of upgrades involved.

What are they using, paper ledgers? Whether it's 10 upgrades or 10 Million (I think they claim 5 Million), the software would crunch right through the numbers. No way any capable accounting department would take that long and have to pay so much. The more I read of their SEC filings the more it smells of a snow job.

This is very disturbing. Their latest SEC filing also introduces some highly complex preferred stock that will be granted only to shareholders who are of record in the next couple of days and based on their percent ownership. That is, it is a very qualified grant to certain target investors. So while the pretext for non filing is going on , they are filing changes in their capital structure to preference certain shareholders. And, at the same time spending down what little cash they have left to "consultants."


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Oliver Peters
Re: Avid continues ...
on Jan 12, 2014 at 2:10:04 pm

[Jack Zahran] "I found something quite shocking in the latest filing. They plan to spend 35 Million of their 45 million in cash to continue trying to restate their accounts due to wrongly classifying upgrades. They say that it's because of the number of upgrades involved. "

I've seen that statement interpreted 2 ways. One interpretation is yours. That other is that this is the cost of the projected adjustment, not the cost of doing the re-evaluation.

- Oliver

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


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Jack Zahran
Re: Avid continues ...
on Jan 12, 2014 at 6:22:14 pm

They refer to them as cash expenditures directly related to the accounting work. Not cool.


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