Avid From Wall Street

Here’s an interesting sidelight. Browsing through the annual report from the Columbia Acorn family of mutual funds, I came across the following. It turns out that their fund, Acorn Select (ACTWX), which I don’t own, holds a lot of Avid stock. This is what they had to say about the company at the end of 2006:

On the downside, Avid Technology, which lagged all year, fell 32% (or reduced the fund’s return by 1.28%) as the company guided sales and earnings down for 2006 due to delayed products and an acquisition that needed resuscitation. While obviously disappointed, we believe the long-term outlook remains sound and we added to the Fund’s position in the stock. Avid is a leader in digital editing software and systems used by the film and news industries. Additionally, we believe that Avid has the potential to become a leader in consumer video and audio editing in the next few years. Over the last decade, consumer competition has dwindled while product demand has increased. We believe that this nascent market should give Avid an opportunity for solid revenue growth.

And here’s what David Krall had to say about the Pinnacle division in Avid’s press release accompanying the release of their 4th quarter results.

In consumer, we had lower than expected results for the year as the business was slow to recover from the product quality problems with the Studio 10 software. We took an impairment charge in the fourth quarter to reflect the decline in the fair value of the consumer business unit. Nevertheless, we believe that the product quality problems are now behind us, and are pleased that we achieved higher-than expected consumer revenues in Q4 based on strong demand in Europe.

Frankly, I’ve never used Pinnacle’s products and don’t know much about them. But I’m not happy hearing that Avid is taking such a beating in the stock market, particularly when it’s because of a product that I’ll probably never use.

Here’s a chart of Avid’s stock price over the last year. It took a couple of big nose dives, one right after those fourth quarter results were reported.

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3 Comments on “Avid From Wall Street”

  1. L.R. Pebler Says:

    “Over the last decade, consumer competition has dwindled while product demand has increased. We believe that this nascent market should give Avid an opportunity for solid revenue growth.”

    Competition in video editing has /decreased/ over the last decade? Referring to the market as “nascent” in 2007? Are you kidding me?

    Looks like the only ones with their heads deeper in the sand (or, ahem, elsewhere) than Avid are its investors.

  2. Steve Says:

    Very funny. They’re referring to competition for consumer editing applications — but it still doesn’t make a whole lot of sense.

  3. Edit Says:

    When I first read about the Pinnacle acquisition I thought it might have been because Pinnacle had some technology patents that Avid felt would strengthen their professional product line. Now, I really have no idea what they’re doing.

    I don’t think this is going to do much to get Avid into the minds of hobbyists given Pinnacle’s history as being something of a flaky company. Personally I’d mash all their best features into one product, get the price within the reach of serious hobbyists and market it as “the editing tool that all the pros use too”.

    Sadly, I think this market segment will be taken over by FCP and Premiere because their product bundles offer much more and are better integrated than Avid’s.


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