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Analyst Cautious on Avid Sale

Avid’s exit from the NAB show floor isn’t necessarily a bellwether of divestiture, analysts say, but a sale also shouldn’t be completely ruled out.

“They’re still looking for a CEO, and that person has to determine the company’s direction,” said Barbara Coffey of Kaufman Bros. in New York.

Former CEO David Krall stepped down in July. Board member Nancy Hawthorne is serving as interim CEO. She recently told analysts that Avid made missteps, rushing products to market and not being able to fully integrate the company’s disparate pieces. Those include pro and consumer audio divisions, broadcast automation company Sundance Digital, and a raft of editing products, one of which is Pinnacle consumer-grade software.

Pinnacle is the most likely target for divestiture, observers agreed.

“Pinnacle under the most speculation,” said Alan Davis, a senior research analyst with D.A. Davidson & Co., in Portland, Ore.

Davis didn’t interpret Avid’s announcement that it would forego exhibiting at NAB as a step toward a sale, even though it came in the wake of Hawthorne’s comments and less-than-expected earning.

“That’s been speculated for a while,” he said. “I took away from this piece of news the theme of more efficient marketing. They spend a lot of money on NAB. They’re one of the biggest presences there.”

One executive at another large NAB exhibitor estimated the associated costs for a company the side of Avid to be around $1.5 million.

“At NAB, there were no holds barred,” Davis said. “They went big time at that show.”

In a way, the exit represents a progression. Avid didn’t introduce any new products last year after delivering late in previous years on major announcements.

Davis said a sale was possible, “but I’m not reading that into it.”

The first contender to emerge in background conversations is Harris, which has been in acquisition mode for quite a while. Thomson Grass Valley is less likely, observers say, although the weak dollar makes a U.S. purchase slightly more attractive to the Paris-based company.

Avid lost of $5.9 million or 14 cents a share in the third quarter, compared to net income of $2.6 million or 8 cents a share last year. It announced Tuesday that it would not exhibit at next year’s NAB show.