Avid Struggles to Reverse Downward Trend

9 Nov

SCRI's NewsBriefs

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Declining Revenue
Avid reported revenues for the nine-month period ended September 30, 2011 were $492.6 million, compared to revenues of $483.2 million for the same period in 2010, a marginal increase of 1.9%. However going back five years to 2007, this represents a 26.6% decline in Q3 revenues. Looking at annual revenues, Avid further cut its full-year 2011 revenue outlook to $665-$675 million from its previous estimates of $690-$710 million, citing restructuring charges and challenging macro environment. Based on this estimate, Avid’s five year trend in annual revenue has declined by 37%.

—-Revenue $M——-
Year Q3 Annual
2011 492.6 665 (Avid estimate)
2010 483.2 678.5
2009 455.9 629.0
2008 638.2 844.9
2007 671.1 929.6
2006 671.5 910.6

Cuts in Staff & Plant Closings
Avid also said it would cut about 10 percent jobs, close a plant and take related charges. Avid plans to cut 10 percent of its total workforce of 1,944, most of them immediately. It will also take a charge of $10-$11 million, most of which will be in the fourth quarter. This continues the trend in staff cuts and plant closings announced by Avid in prior years. According to the Form 8-K filed with the SEC on December 6, 2010, Avid stated that ”The Company expects to incur $10 to $12 million in severance costs relating to the elimination of positions and about $4 million relating to the closure of the office facilities.” The 2010 announcement came little more than a year after Avid laid off 410 workers, or about 15 percent of its staff at the time.

Share Price Down
On the day of the current Q3 financials announcement (October 27, 2011) Avid shares plunged to a 10-year low of $6.55 in morning trade on Nasdaq. This compares to the 2006 price of $38.98.

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