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Franz Bieberkopf
Avid Restatement
on Sep 17, 2014 at 2:54:53 pm

I'm surprised no one has posted this yet.

http://ir.avid.com/releasedetail.cfm?ReleaseID=870543

"As a result of our restatement and in accordance with GAAP, revenue that had originally been recognized in earlier periods is now being recognized ratably over an extended timeframe," said John Frederick, executive vice president, chief financial officer and chief administrative officer of Avid. "The amount of revenue earned or to be earned over the entire period of recognition essentially remains unchanged from the amount we historically recognized. There was no change to the cash characteristics of the transactions being restated nor to the Company's liquidity directly relating to these transactions."
[...]
"Following the filing of Avid's first quarter 2014 financial report, the Company plans to apply for relisting on the NASDAQ stock exchange."

Also, if I'm reading all of it correctly (and I'm not sure that I am), Avid has been in profit for 3 years now.

Franz.


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Craig Seeman
Re: Avid Restatement
on Sep 17, 2014 at 9:24:01 pm

http://www.bostonglobe.com/business/2014/09/12/avid-moves-toward-nasdaq-rel...

But the filing, which includes the company’s annual report for the fiscal year ended Dec. 31, 2013, makes it clear that revenue has been falling, which it blamed on an accounting rules change. In 2011, Avid reported revenue of $766,885. In 2013, Avid said it generated revenue of $563,412, it said.

So that's declining revenues according to this. Those revenue numbers look very low as well if there are no hidden zeros. Hundreds of thousands of dollars only?



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Franz Bieberkopf
Re: Avid Restatement
on Sep 17, 2014 at 9:32:03 pm

[Craig Seeman] "Those revenue numbers look very low as well if there are no hidden zeros."


Craig,

Follow my link ... the zeros are hidden.

Between this and Reuters describing Adobe's "web-based subscription for its Creative Suite 6" in Marcus' link the other day, online business journalism continues its decline.

Franz.


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Craig Seeman
Re: Avid Restatement
on Sep 18, 2014 at 2:19:29 am

[Franz Bieberkopf] "online business journalism continues its decline."
Sloppy business journalism for sure. Considering the importance of numbers it's tragically unforgivable.

I do see this in the article you link to.

Revenues for the twelve-month periods ended December 31, 2013 and 2012 were $563.4 million and $635.7 million

That's
2012 $635.7 million
2013 $563.4 million
and

GAAP net income for the twelve-month periods ended December 31, 2013 and 2012 was $21.2 million and $92.9 million, respectively.

Which is
2012 $92.9 million
2013 $21.2 million

and
Adjusted EBITDA was $80.3 million and $117.8 million for the twelve-month periods ended December 31, 2013 and 2012, respectively.

Which is
2012 $117.8 million
2013 $80.3 million

These are all declines. Of course we'll need to see previous years to note trends and/or any interruptions/anomalies in them.



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Franz Bieberkopf
Re: Avid Restatement
on Sep 18, 2014 at 2:51:15 am

[Craig Seeman] "These are all declines."


Craig,


Yes. It's also funny to see the new "bookings" terminology thrown in there. (And bookings are up!)

Nonetheless, these are profits and I think it shows 3 years of profits after years of losses. (Unless I'm reading this all wrong.)

That's remarkable and I'm surprised there hasn't been more made of it.


Franz.


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Franz Bieberkopf
Re: Avid Restatement - Profits for 3 Years
on Sep 18, 2014 at 3:26:02 am

Craig,

Reference on losses:
http://forums.creativecow.net/readpost/335/21986

Loses 2008-2010
http://finance.yahoo.com/q/is?s=AVID&annual
Dec 31, 2010 (36,954)
Dec 31, 2009 (68,355)
Dec 31, 2008 (198,177)



Using the same line ("Net Income") as you use to measure the losses above, profits are either:

2011 +192,398
2012 + 90,016
2013 + 57,160

or

2011 +162,460
2012 + 47,087
2013 + 21,153

… zeroes hidden.

Isn't this the headline?

Franz.


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Craig Seeman
Re: Avid Restatement - Profits for 3 Years
on Sep 18, 2014 at 3:48:14 am

That the numbers are dropping again can indicate that the gains were temporary and possibly centered around the EOL of FCP7. As Adobe picks up in some high end facilities Avid is again declining.



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Franz Bieberkopf
Re: Avid Restatement - Profits for 3 Years
on Sep 18, 2014 at 1:04:27 pm

[Craig Seeman] "As Adobe picks up in some high end facilities Avid is again declining."


Craig,

Maybe. They're projecting a rise in profit for 2014.

Franz.


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Craig Seeman
Re: Avid Restatement - Profits for 3 Years
on Sep 18, 2014 at 3:09:00 pm

[Franz Bieberkopf] "Maybe. They're projecting a rise in profit for 2014."

Anything is possible but the numbers do point down, not up.
One might guess that 2012 was a bump up given the history of losses but we won't know that for sure until we see the revised 2011 numbers. The drops from 2012 to 2013 look relatively large though.

BTW in theorizing about the FCP7 EOL it's not that suddenly MC sales lifted them, it's the move away from FCP7 might have included a move to Avid's storage systems where they make their bigger money, as some large clients move back to MC/Symphony.



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Franz Bieberkopf
Re: Avid Restatement - Profits for 3 Years
on Sep 18, 2014 at 3:27:06 pm

[Craig Seeman] "Anything is possible but the numbers do point down, not up."

Craig,

I think the numbers are up and down.

http://ycharts.com/companies/AVID/profit_margin

You can pretty clearly see bleak years there from 2005-2010 or so. The shroud of mystery has been lifted though on the past few years and 2011-2013 are profitable after much restructuring and layoffs and new board members.

There's been real uncertainty about what's been going on at Avid, what the financial irregularities really mean, and what the future might be - those who depend on Avid are probably relieved that the restatements paint a healthier picture than the one that many speculations pointed to.

I'm not particularly inspired by what I see in terms of software (and services) but there are those who rely on Avid and like the stuff. This has to be good news for them.


Franz.


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Scott Witthaus
Re: Avid Restatement
on Sep 18, 2014 at 9:46:05 am

I don't think so. At least not for the last three years. I would doubt a company in a profit would have so many changes as Avid did.

I watched the 17 minute investor relations video from the CFO and it seemed he danced around any bottom-line figures about a profit. Through cost cutting things look better, but not from a huge jump in actual sales. I really don't think the FCP7 EOL made more than a blip for Avid. Adobe won that race.

I think they are on a good course, but their cash position is way down (historically) and it looks like for the first time in a while they have debt ($5million). The 2014 numbers will be more interesting as there will be a surge in revenue based on the new subscription model that Avid is forcing it's loyal users.

Scott Witthaus
Senior Editor/Post Production Supervisor
1708 Inc./Editorial
Professor, VCU Brandcenter


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Mark Suszko
Re: Avid Restatement
on Sep 18, 2014 at 2:15:26 pm

When the arbitragers and speculators and financier types start controlling the company, so that accounting trickery is put ahead of new product development, or customer service, I think you have the beginnings of a long downward slide. Shareholders will still be happy. But how many others?


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Andrew Kimery
Re: Avid Restatement
on Sep 18, 2014 at 3:23:26 pm

[Mark Suszko] "When the arbitragers and speculators and financier types start controlling the company, so that accounting trickery is put ahead of new product development, or customer service, I think you have the beginnings of a long downward slide. "

I don't think that's happening with Avid (at least not yet). There is been a lot of improvements made to MC over the last 4-5 years. If Avid is floundering anywhere on the customer facing side I think it's their marketing department. For example, there is lots of confusion over what Avid Everywhere is, I keep seeing people wrongly assuming that Avid went subscription only, and some longtime products have gotten new, and IMO confusing, names (ex. Interplay Sphere is now called Media Composer Cloud).


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Andrew Kimery
Re: Avid Restatement
on Sep 18, 2014 at 3:16:15 pm

[Scott Witthaus] "The 2014 numbers will be more interesting as there will be a surge in revenue based on the new subscription model that Avid is forcing it's loyal users."

Avid offers a perpetual license option and a subscription option.


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David Mathis
Re: Avid Restatement
on Sep 18, 2014 at 4:10:09 pm

[Andrew Kimery] "
[Scott Witthaus] "The 2014 numbers will be more interesting as there will be a surge in revenue based on the new subscription model that Avid is forcing it's loyal users."

Avid offers a perpetual license option and a subscription option."


I think the approach Avid is taking is a much more fair approach. Of course if you decided to opt out then start again, you have start from scratch again which could prove to be more expensive. With any subscription model, having a good strategy is of key importance just like it is with the stock market.

Slightly OT:

Assuming that BMD really steps up to the plate with Resolve as an NLE and there is tight integration between Resolve and Fusion, wondering what effect that will have on Adobe and Avid, looking at both short and long term.

camera operator | editor | production assistant

Remember kids, tracks are you friends when you charge by the hour. Track Tetris, game on!


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Scott Witthaus
Re: Avid Restatement
on Sep 18, 2014 at 6:13:39 pm

[Andrew Kimery] "Avid offers a perpetual license option and a subscription option."

But still, you either buy the annual support by 12/31 or when you do want to upgrade, you pay full license price. So, that is what I mean by "force". Or am I missing something here.

For example, in my market Avid has largely gone away. Maybe one shop that clings to it, but usually uses Premiere or FCP. I still have an MC7.0.3 license on my computer for "just in case". But quite honestly, I have not had a paid Avid gig in years, so paying $299 makes no sense. However, if I don't do it (buy their support) before the 31st of December, I am penalized and have to basically re-purchase the license. Good for Avid revenue, bad for me.

Now I know some people will say "it's only $300 bucks! Just fork it over!". Sorry, I don't think that way. So while Avid may get a surge of revenue at the end of the year with this "tactic", they have lost me as a paying customer and I am sure many others like me. Hello, FCPX and Resolve (when it's worth a sh**).

Scott Witthaus
Senior Editor/Post Production Supervisor
1708 Inc./Editorial
Professor, VCU Brandcenter


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Michael Hancock
Re: Avid Restatement
on Sep 18, 2014 at 6:20:20 pm

[Scott Witthaus] "However, if I don't do it (buy their support) before the 31st of December, I am penalized and have to basically re-purchase the license. Good for Avid revenue, bad for me."

Or you pay $75 to rent it monthly when you get an Avid job, without locking yourself into a contract. When the job is over, you cancel. Seems like a win-win.

----------------
Michael Hancock
Editor


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Franz Bieberkopf
Re: Avid Restatement
on Sep 18, 2014 at 6:22:47 pm

[Scott Witthaus] " However, if I don't do it (buy their support) before the 31st of December, I am penalized and have to basically re-purchase the license."

Scott,

You have options.

One of those is to continue using the version you purchased as long as you wish with no additional costs.

Franz.


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Andrew Kimery
Re: Avid Restatement
on Sep 18, 2014 at 6:46:31 pm
Last Edited By Andrew Kimery on Sep 18, 2014 at 6:47:34 pm

[Scott Witthaus] "But still, you either buy the annual support by 12/31 or when you do want to upgrade, you pay full license price. So, that is what I mean by "force". Or am I missing something here."

To me it's no different than an upgrade discount. If you upgrade w/in a certain time period you get a discount. If you do not upgrade w/in a certain time period you do not get a discount. If you buy the perpetual license and choose not to upgrade your software still works. You are not forced to pay Avid any more money beyond the initial purchase price in order to keep using the software.

The $299 "service agreement" (or whatever Avid legally has to call it) allows Avid to roll out feature upgrades whenever they want and not violate federal accounting regulations in the US. It's a presumed violation of these regulations that led to Avid not divulging its finances and eventually getting delisted from NASDAQ. For example, all the new features shown at IBC for the MC 8.1 upgrade could not be made available under Avid's previous distribution model. Under the old model all those feature upgrades would have to be put on hold until MC 9 was released. I don't see it as an evil tactic but just as a way for them to stay competitive while still giving customers options w/o violating the law.

The common refrain from the "I hate Adobe" crowd isn't the price but the fact that there's no perpetual license option and Avid gives you a choice between buying a perpetual license or signing up for the subscription plan. Putting Adobe and Avid in the same bucket is inaccurate, IMO, as they have different offerings.


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David Mathis
Re: Avid Restatement
on Sep 18, 2014 at 10:09:24 pm

[Andrew Kimery] "
The common refrain from the "I hate Adobe" crowd isn't the price but the fact that there's no perpetual license option and Avid gives you a choice between buying a perpetual license or signing up for the subscription plan. Putting Adobe and Avid in the same bucket is inaccurate, IMO, as they have different offerings."


Something that else might play a role in is could be that Adobe wants to serve a segment of the market. I am no saying this is bad or good, just a direction that chose to go in. I respectfully dislike the current offering but that is the way the ball bounces. There are plenty of options out there.

I agree with Andrew, it is more an apples and oranges type of comparison.


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Dennis Radeke
Re: Avid Restatement
on Sep 19, 2014 at 1:26:10 pm

[David Mathis] "Adobe wants to serve a segment of the market"

Hi David,

I'm curious as to what you mean by this. From our point of view, we strive to make the best products that will address all segments of a given market (eg non-linear editing). That said, I could clearly be misunderstanding your intended meaning.

Thanks,
Dennis - Adobe guy


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David Mathis
Re: Avid Restatement
on Sep 19, 2014 at 2:35:10 pm

Dennis,

As a hobby and sometimes freelance work, CC is just not a viable option for me because of the current subscription model. Short term I think I would be fine but over the long term I simply feel that it will be too expensive.

I know that Adobe is doing their best to serve the entire market place but feel that the current model is meant for studios and mid to large size businesses, some small business but as an individual user I feel the cost is a bit much. That is what I mean by a certain segment, at least from my point of view. I hope that I am not being viewed as defensive and hope no offense is taken. Perhaps audience would have been a better word of choice.

I really do appreciate you giving us updates and doing what you can to find solutions for everyone. I also appreciate what Todd and Kevin are doing as well. You guys are really great and continue to be very helpful.

I would consider subscribing if there was some type of buyout option after a set time. At present I respectfully disagree with the current model. I hope my response brings some clarity and will be more than willing to discuss this further, if you like.

Sincerely,

David Mathis


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Dennis Radeke
Re: Avid Restatement
on Sep 19, 2014 at 5:28:39 pm

First David, thanks for your response and yes, I totally understand the tenor/tone in which you voice your concerns. I think in order to be in this business, you need to have a thick skin to begin with! It's also worth commenting that the Cow forums are a beacon of independent yet polite discourse on the subjects that we all care passionately about. So bravo to all of you!

[David Mathis] "As a hobby and sometimes freelance work, CC is just not a viable option for me because of the current subscription model."

Yup, totally get that. My only qualifying statement would be that if you're earning just $1000 a year in some kind of freelance work, then the software has paid for itself and left you a few $$$ left over for other equipment to 'fund' your habit. Side note - I have far to many 'habits' that I have to fund! Who knew hobbies could be so expensive!

[David Mathis] "Short term I think I would be fine but over the long term I simply feel that it will be too expensive."

Again, there is a month option if you get a gig to turn on activation for a month. If you have a billable job, then you have just to add a line item to your quote. Not defending or diminishing your statement or thoughts, just putting out there that Adobe does try to make choices available in as many scenarios as possible.

[David Mathis] "the current model is meant for studios and mid to large size businesses, some small business but as an individual user I feel the cost is a bit much."

As a guy who spends the majority of his time on large size businesses (I'm in the New York area), I could understand where you're coming from but the truth is that individual memberships are also a big part of our market and we're doing well there. As a company who just announced another 500,000 new users, I am sure that a good chunk of them are individuals.

[David Mathis] "I would consider subscribing if there was some type of buyout option after a set time. At present I respectfully disagree with the current model."

I would love to see something that rewards membership as well. Hopefully we'll see something like that in the future and you can be sure that I make it known to the powers that be when the opportunity presents itself.

As always, thanks for the discourse and conversation. We'll hope to earn your business and enthusiasm in the future. Until then...

Cut hard,
Denns - Adobe guy


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David Mathis
Re: Avid Restatement
on Sep 19, 2014 at 7:09:30 pm

Thank you for the feedback, very much appreciated. I hope there is some customer award or loyalty type of program as well. I would be willing to spend a little more up front for the old school license with a two year mandatory subscription on an annual or monthly cost basis with a slight discount for those that choose annual. To me that would be of benefit for both Adobe and its customers. This way, people will still be able to open files, regardless if the let their subscription lapse after the two year period. That is the other "concern" I do have.


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Oliver Peters
Re: Avid Restatement
on Sep 24, 2014 at 8:53:16 pm

More info:

http://www.studiodaily.com/2014/09/avid-talks-growth-strategy-as-it-complet...

- Oliver

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


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