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Craig Seeman
The Street - Why Avid (AVID) Is Falling Today
on Feb 26, 2014 at 3:10:38 pm

Why Avid (AVID) Is Falling Today
http://www.thestreet.com/story/12442174/1/why-avid-avid-is-falling-today.ht...

Key bits
The net income has significantly decreased by 130.3% when compared to the same quarter one year ago, falling from -$7.55 million to -$17.39 million.

Net operating cash flow has significantly decreased to -$1.38 million or 1167.44% when compared to the same quarter last year.

Also see this with an emphasis on their music side.

Avid, Maker of Pro Tools, Now Losing Money Faster and Delisted from NASDAQ
http://createdigitalmusic.com/2014/02/avid-maker-pro-tools-now-losing-money...

There will certainly be implications for Pro Tools, Sibelius, and other Avid products. These are about more than just the technical quality of the products themselves. Maintaining a successful relationship with customers is dependent on running a successful business, and being able to make the investments in support and development that requires.


The bad is basically their net income and cash flow are dropping. This is separate from their accounting mess.

Apparently Avid will have their own spin (webcast) aired 9AM ET today.
Avid Announces Availability of Investor Update Webcast
http://online.wsj.com/article/PR-CO-20140226-907782.html

But things are UP on OTC
http://www.efinancehub.com/tech-gainers-avid-technology-otcmktsavid-tigerlo...
Avid Technology, Inc. (OTCMKTS:AVID)’s stock traded at beginning with a price of $5.38 and throughout the trading session climbed at a high of $6.06 and later when day-trade ended the stock finally Inclined 22.11% to end at $6.02.

I have a hunch some speculative investors are maybe expecting a sale or an influx in capital investment.

And some good product sales new here

http://www.nismagazine.com/hot-stocks-avid-technology-inc-and-orion-energy-...
Avid Technology, Inc. (OTCMKTS:AVID) shares rose in response to the news of the company’s first UK customer for it Avid S6® surface. Bristol (UK) based “Films at 59” which will be the first to use the Avid S6 (R) offers administrative and workflow support for broadcasters and independent producers in the UK.

Interesting note
Moving to the OTC however was not a bad omen for the stock as it posted the highest volume the same day.

So some may well see Avid getting needed capital.



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Franz Bieberkopf
Re: The Street - Why Avid (AVID) Is Falling Today
on Feb 26, 2014 at 3:54:04 pm

[Craig Seeman] "The net income has significantly decreased by 130.3% when compared to the same quarter one year ago, falling from -$7.55 million to -$17.39 million."

Craig,

Do you know where they are getting these numbers from?

I thought Avid hadn't posted any financial statements since 2012.

Franz.


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Craig Seeman
Re: The Street - Why Avid (AVID) Is Falling Today
on Feb 26, 2014 at 4:26:03 pm

[Franz Bieberkopf] "Do you know where they are getting these numbers from?"

Very good question. I wonder if Avid said something informally in advance of their investor "webcast" apparently released today.



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Oliver Peters
Re: The Street - Why Avid (AVID) Is Falling Today
on Feb 27, 2014 at 2:08:26 am

Video is here:

http://ir.avid.com

- Oliver

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


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Mitch Ives
Re: The Street - Why Avid (AVID) Is Falling Today
on Feb 27, 2014 at 6:28:12 pm

[Franz Bieberkopf] "Do you know where they are getting these numbers from?

I thought Avid hadn't posted any financial statements since 2012."


If they're listed publicly on the exchange, they have to provide that information in their 10Q's and 10K reports...

Mitch Ives
Insight Productions Corp.

"Criticism may not be agreeable, but it is necessary. It fulfills the same function as pain in the human body. It calls attention to an unhealthy state of things." - Winston Churchill


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Franz Bieberkopf
Re: The Street - Why Avid (AVID) Is Falling Today
on Feb 27, 2014 at 6:31:57 pm

[Mitch Ives] "If they're listed publicly on the exchange, they have to provide that information in their 10Q's and 10K reports..."

Mitch,

... you'd think if they broke those rules, they might even get delisted.

Franz.


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Chris Harlan
Re: The Street - Why Avid (AVID) Is Falling Today
on Feb 27, 2014 at 6:50:08 pm

[Franz Bieberkopf] "Mitch Ives] "If they're listed publicly on the exchange, they have to provide that information in their 10Q's and 10K reports..."

Mitch,

... you'd think if they broke those rules, they might even get delisted.

Franz.
"


LOL


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Mitch Ives
Re: The Street - Why Avid (AVID) Is Falling Today
on Feb 28, 2014 at 2:05:33 pm

LOL... I think you could be right...

Mitch Ives
Insight Productions Corp.

"Criticism may not be agreeable, but it is necessary. It fulfills the same function as pain in the human body. It calls attention to an unhealthy state of things." - Winston Churchill


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Scott Thomas
Re: The Street - Why Avid (AVID) Is Falling Today
on Feb 27, 2014 at 6:21:54 am

Took note the other day that Harris Broadcast has a splash page saying they are going announce something big, in New York, in a little over two weeks. With all the other consolidation going on in the industry (i.e. Belden-Miranda-Grass Valley) What's to say that Harris and Avid couldn't become one? I had heard that Harris needed to change their name after they were jettisoned from the parent. Avid might be a name they could use?

Some of the products fit. How about an Avid Deco-Inscriber?

No insider info, just thinkin'


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David McLasty
Re: The Street - Why Avid (AVID) Is Falling Today
on Feb 27, 2014 at 4:56:47 pm

I'm not bashing Avid, I own a Symphony 6 system. But They are getting slaughtered by Adobe and Apple with their pricing model, Premiere with their mercury playback is very, very good.

I used FCPX for about an hour last month and hated it. If i needed to switch to Premiere tomorrow the workflow would be 80% of what I do now with Symphony.


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Craig Seeman
Re: The Street - Why Avid (AVID) Is Falling Today
on Feb 27, 2014 at 5:31:33 pm

[David McLasty] "I'm not bashing Avid, I own a Symphony 6 system. But They are getting slaughtered by Adobe and Apple with their pricing model, Premiere with their mercury playback is very, very good."

The problem is that Avid isn't a software company. Most of their revenue is hardware... and that's not doing as well as it should.

I mentioned elsewhere that Avid really needs to commit R&D for better Isis integration with other NLEs, IMHO. Every facility that goes Adobe is a facility that isn't going Isis.



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Franz Bieberkopf
Re: The Street - Why Avid (AVID) Is Falling Today
on Feb 27, 2014 at 6:05:53 pm
Last Edited By Franz Bieberkopf on Feb 27, 2014 at 6:07:48 pm

[Craig Seeman] "The problem is that Avid isn't a software company. Most of their revenue is hardware."

Craig,

You've made much of this theory, but I've never seen the breakdown.

These numbers from 2011 aren't clear to me (in terms of hardware vs. other) either:
http://forums.creativecow.net/readpost/335/34077

Franz.


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Craig Seeman
Re: The Street - Why Avid (AVID) Is Falling Today
on Feb 27, 2014 at 6:30:50 pm

Granted it may take a little extrapolation but these are the numbers that I believe Philip Hodgetts used when he wrote about the subject.

http://www.sec.gov/Archives/edgar/data/896841/000089684112000013/avid-12312...



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Craig Seeman
Re: The Street - Why Avid (AVID) Is Falling Today
on Feb 27, 2014 at 6:34:51 pm

This also is an indicator.

http://blog.devoncroft.com/2012/04/27/avid-revenue-drops-nine-percent-in-q1...

Video revenue in the quarter was $84m, down 11% versus the same period a year ago, and down 28% versus the previous quarter. Video revenue accounted for 55% of the total revenue during the quarter, versus 63% last quarter. Although service revenue was strong in video, Avid had a 20% decline in video product sales versus last year. In the pro video market, overall video editing unit sales were up by more than 30% versus last year, but because of a larger percentage of software sales, the overall the revenue from these sales was 30% lower than the same period a year ago due to lower hardware sales. Shared storage and workflow systems were strong in the quarter, growing 8% versus last year.



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Craig Seeman
Re: The Street - Why Avid (AVID) Is Falling Today
on Feb 27, 2014 at 6:39:06 pm

Or to put it simply, even when Media Composer/Symphony sales are UP they continue to LOSE money because they make significantly more from hardware.

video editing unit sales were up by more than 30%
yet
overall the revenue from these sales was 30% lower than the same period a year ago due to lower hardware sales.

That shows a huge disparity over what's selling (software) and what they need to sell to increase revenue (hardware).



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Franz Bieberkopf
Re: The Street - Why Avid (AVID) Is Falling Today
on Feb 27, 2014 at 6:41:46 pm

Craig,

If that's true, those are pretty wild swings.

Video was 40% of revenue in 2011, then 63%, then 55% for the quarter in this report (this was all before they sold their consumer products line). Those seem like wild swings in sales to me.

I still don't really see any conclusive breakdown of hardware vs. software in any of this, though.

Franz.


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Craig Seeman
Re: The Street - Why Avid (AVID) Is Falling Today
on Feb 27, 2014 at 6:44:23 pm

[Franz Bieberkopf] "I still don't really see any conclusive breakdown of hardware vs. software in any of this, though."

In my followup post I note 30% increase in software but still heavy loses in revenue due to lack of hardware sales. Video Software sales barely make a dent in revenue.



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Franz Bieberkopf
Re: The Street - Why Avid (AVID) Is Falling Today
on Feb 27, 2014 at 6:51:00 pm

Craig,

But you're making the case that their profit and future is in hardware.

Do they currently generate more revenue from hardware?
Do they make higher profit margin from hardware?

I don't see any answers about either of those questions.

Revenue is down on a rise in units sold because the units (software) sell for less. This tells me nothing about the profit potential. If the profit is higher on the cheaper widgets (software) then it would seem that is where the future is.

Franz.


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Craig Seeman
Re: The Street - Why Avid (AVID) Is Falling Today
on Feb 27, 2014 at 7:48:31 pm
Last Edited By Craig Seeman on Feb 27, 2014 at 7:55:52 pm

Media Composer sales growth hasn't done anything for them. The level of revenue growth needed from MC is probably unreachable.

This is not just my own supposition. Analysts I've read all say they really need to push hardware growth. Smaller hardware (compared to software) growth would yield greater revenue. Bigger profit margin potential and then there's the service contracts that yields.



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Oliver Peters
Re: The Street - Why Avid (AVID) Is Falling Today
on Mar 1, 2014 at 12:08:30 am

For those interested, from the Avid Community forums:

http://community.avid.com/forums/t/125975.aspx

- Oliver

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


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Andrew Kimery
Re: The Street - Why Avid (AVID) Is Falling Today
on Mar 1, 2014 at 1:04:07 am

Thanks for the link Oliver. I did watch the video but Marianna's post was short but sweet. Since Avid is looking back over 8 years worth of accounting I'm not surprised it's taking a long time.


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Franz Bieberkopf
Re: The Street - Why Avid (AVID) Is Falling Today
on Feb 27, 2014 at 6:36:06 pm

[Craig Seeman] "Granted it may take a little extrapolation but these are the numbers ..."

Craig,

Those numbers are the same from the breakdown chart in my link.

If I squint hard I see a 50/50 split in hardware / software. But I might be looking at it wrong. What numbers make you think they rely more on hardware for revenue?

Franz.


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Stefani Rice
Re: The Street - Why Avid (AVID) Is Falling Today
on Feb 27, 2014 at 7:30:57 pm

Avid has released the following statement:

Avid statement:

The financial results being quoted in this article are erroneous. Due to the accounting evaluation and restatement process Avid has been going through, we have not issued any financial statements after Q3 2012. As we have previously reported, as a result of the restatement, previously issued financial statements are not accurate and should not be relied upon. We request that you delete any reference to Avid’s financial results, as your reporting is inaccurate.

Avid’s de-listing from NASDAQ and its subsequent listing on OTC is the result of delays in the reporting of financial information -- it was not related to operating performance in any way.

We are continuing to work very hard to correct the accounting, which is related to nearly 5 million transaction lines spanning eight-and-a half years. We announced that we are targeting completion of the restatement by mid-2014.

We continue to invest in product innovation. Since the beginning of the restatement process, we released Pro Tools 11, Media Composer 7, Sibelius 7.5, two new online shared storage offerings, a brand new mixing console – the S6, as well as a new live sound system – Avid S3L.

With a compelling Avid Everywhere vision established, the launch of the ACA, a significant number of new product innovation announcements planned for 2014, we believe we remain well positioned to support our customers’ ongoing success.



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Craig Seeman
Re: The Street - Why Avid (AVID) Is Falling Today
on Feb 27, 2014 at 8:07:01 pm

Of course they're erroneous but, based on what Avid has said about the accounting issues, they won't have any significant changes in revenue. Of course they're still introducing new products but unless there's some surprise changes, they don't seem to be generating the revenue needed to be profitable.



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Franz Bieberkopf
Re - tracting Re: Avid
on Feb 28, 2014 at 12:07:57 am

Both "The Street" and "createdigitalmusic" backing up from yesterday's posts.

http://createdigitalmusic.com/2014/02/avid-delays-financial-reporting-promi...

To be clear:

"The Street reporting (and thus ours, in building a report on it) was inaccurate and misleading in that financial data for Avid actually isn’t available. ... The main point is this: we don’t have any 2013 numbers for AVID. Avid has filed no earnings reports, including the 2013 Form 10-K ..."


"Analysts say", indeed.

There's this bit too:

"Avid’s new strategy centers on media management. ... Avid’s CEO Louis Herndandez, Jr. did provide a peek into the new Avid strategy, “Avid Everywhere.” ... Hernandez says that the “value chain” has shifted beyond just creation, to monetizing and sharing content. The solution appears to be a combination of cloud solutions and new media management tools built into software like Pro Tools and Media Composer. ... these would even give you the ability to finish a track in Pro Tools at home, then have a TV studio looking for music for a sports feature license it from you, all within an Avid-run marketplace. There are also new tools ranging from metadata, tagging, and search to cloud-based collaboration and exchange."

I think the emotional core of those words is "Avid-run marketplace".

Franz.


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