Avid Boss Outlines Shortcomings, Strategy

Avid Technology could have handled its 2005 acquisition of Pinnacle more skillfully and it needs to improve relationships with customers—notably those disappointed with some editing products, Avid’s interim CEO said.
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Avid Technology could have handled its 2005 acquisition of Pinnacle more skillfully and it needs to improve relationships with customers—notably those disappointed with some editing products, Avid’s interim CEO said.

“Looking back, if I could wave my magic wand, I would have had the company grow not quite so fast as it did in some of those boom years,” Nancy Hawthorne told analysts at the J.P. Morgan Small/Mid Cap Conference in Boston Monday. “We did not integrate the several acquisitions that we did particularly well, and as a result, we have kind of a mishmash of different systems, and the company has not been positioned strategically to operate as a seamless entity in presenting a lineup of products to the marketplace.”

The company also rushed some products to market, she said, a resulting in “a quality issue,” particularly in the video business, bringing a severe flattening effect in 2007.

“Some things people just have not been ordering because they’ve been unhappy with Media Composer and the editing products,” she said.

Avid has spent most of its development efforts in the video business in 2007 on fixing those problems with new versions being released now to certain customers. “It’s working out well and it’s beginning to release the flow of orders,” Hawthorne said.

The company’s consumer business is now at best break-even, she said. “So we do need to understand what role the lower-end technology plays in our lineup. Is it strategically critical to us, or is it not?”

Hawthorne also said the company needs to deepen relations with its enterprise customers. As a good example, she cited the company’s sale—one of the largest in its history—to France24, a 24-hour network in three languages. Completed in the second quarter of 2007, Avid acted as the prime contractor on the project.

“Monetizing our vertical expertise through an increasing focus on services is one of the hallmarks of our professional video strategy,” she said. “These are complicated projects. More and more people want not just to buy the product, but they want you to come in and make it work.”

As an example of the company’s new and innovative offerings, Hawthorne touted the Pinnacle HD Pro Stick, which allows ATSC reception on laptops and other computers.

“Many people don’t understand that you can get HDTV over the air in your home for free without having satellite or cable, and we are making that capability accessible to today’s more mobile population by making it possible to get digital television right on your laptop,” she said.

One analyst asked whether the Pinnacle purchase gave “indigestion” to Avid and discouraged it from future acquisitions.

Hawthorne responded that the company wouldn’t rule out such deals, but next time around it would be better prepared to merge systems such as health care and IT more quickly, and work on preserving only what’s special about the acquired unit.

“Avid has a unique set of strengths that if we pull our act together and execute well I think we can regain quickly,” Hawthorne said. “But we have missed out on some opportunities, there’s no question.”