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Avid Technology, Inc. Message Board

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  • semper_spqr semper_spqr Dec 24, 2002 10:44 AM Flag

    Downgrade

    I�m doing my DD, after learning about Avid�s PEG ration in Smartmoney, and would like to get a better understanding from the longs here, just why Avid�s price is so seemingly out of whack. This is not a slur, just an observation based upon the metrics commonly used by analysts to evaluate fair market value.

    The answer must lie in Avid�s technology. So, would a long kindly post a reply to the following questions:

    a. Is Avid�s technology unique and protected by patents? If so, are there alternative technologies that could/might replace Avid in their targeted market?
    b. What is the total potential market for Avid�s existing products, today and five years from now (estimated)?
    c. Is the management team in place today the same team that steered the company over the last five years?
    d. Why does management own so few shares in the company, and what is the prognosis that their unexecuted options will be executed over the next 12 months?
    e. Why has Avid�s total revenue declined from last year to this one? Is this considered a temporary condition?
    f. Why has Avid decreased spending in R&D? Is this wise given its future challenges?
    g. I noticed that Avid is predicting 52 cents, eps, for next year 4 cents lower that previous estimates. When did this reduction in future earnings get announced, and what was management�s explanation? I could not find this anywhere, the estimate just changed.
    h. What�s the impact of the Oct�02 acquisition? What was paid, and what�s the impact on eps for Avid�s 4th quarter? Does this explain the eps reduction? How about next year?
    i. Why did Mellon Bank go from a 5% owner to a 10+% owner to less than 5% owner? This all happened recently.
    j. Why has the stock been climbing? I can�t find any reason for it to be climbing as it has. Is it momentum or something tangible?

    I know this is a lot to ponder, but I�m at a loss to come up with the answers myself and I see the potential to make money here. Whether this means going long or short, I don�t know yet.

    Thank you all in advance.

    I'd rather not here from anyone with an ax to grind.

    Thank you once more.

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    • I may be able to help on a few points:

      a. Is Avid�s technology unique and protected by patents? If so, are there alternative technologies that could/might replace Avid in their targeted market?

      Yes Avid hold 100's of patents. Avid invented this market (Non linear editing) back in the late 80's so they hold a TON of related patents.
      Being from the indusrty I can tell you that Avid is the technology leader. Could someone come out with some wiz-bang technology to rival Avid ..yes. Avids real stregnth is in the fact that they are EVERYWHERE in the industry. Outfitting an NLE shop or Broadcast newsroom is a VERY expensive undertaking. The competition would have to present a pretty compelling reason for these Avid customers to convert because it is as I said NOT cheap to do so and Avids gear does the job better than anything out there.

      f. Why has Avid decreased spending in R&D? Is this wise given its future challenges?

      I believe Avid has spent a lot of R+D on HD solutions and Broacast solutions over the last 3-4 years. I think the lions share of that very expensive R+D has been done as they are shipping HD products now. Avid has also cleaned up its balance sheet substantialy over the last few years. I think the spending was out of control during the previous mngmt era and is now coming in line

    • Read my past posts for an education.

      As regards their recent acquisition - they haven't disclosed anything about it other than it happened. You can bet the numbers don't look good, otherwise, this slap-happy, press release prone management would have said much more.

      Oh, and the gentleman who mentioned avid's 100s of patents from the 80s either doesn't realize they have all expired or are at best obsolete.

 
AVID
9.84+0.24(+2.50%)Oct 20 3:59 PMEDT

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