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Avid Technology, Inc. Message Board

  • slipedit slipedit Apr 19, 2002 1:28 AM Flag

    Earnings: Avid vs. Apple, a seachange

    Apple reported a net profit of $40 million, 11 cents per share - a 4 percent increase from the same period a year ago.

    Avid earnings were down $28 million from the same period, $92m vs. $118m - a net loss of $3.7 million or $.14 per share.

    Final Cut Pro SD editing systems are about $18K, Avid SD editing systems are about $50K. Avid HD editing systems cost between $85K - $190K. Final Cut Pro HD editing systems cost about $40K. Avid upgrades are $3000, Final Cut Pro upgrades are $249.

    What company are you going to invest in? Moreover, how much are you going to spend on an editing system?

    Me thinks the tide is turning.

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    • Cal:

      Please do not apologize for your posts. They are insightful and candid....keep 'em coming.

    • Interesting post; but like he said in the end. Avid has nine lives and he wouldn�t be surprised to see them come out in the lead again. Besides, don�t underestimate the difference having a MAC XpressDV is going to make, Also, Avid has the installed market and the best tools. All they have to do to put more pressure on the comp is lower there prices. Sony doesn�t have the heart for stuff like this; I expect them to be around 1 to 2 years at most. Probably 1. Now Apple is different. They may force Avid to have to partner with someone else or get bought in order to stick around. If they get bought, I wouldn�t think it would be for less then $10-13 they are at now so I would think you money is safe with a decent upside if the economy gets a little better. Word on the street is business is starting to pick up again.

    • "OUCH" I've been gender-bent.

      If you are going to divide up my id, it's 'Cal Lher Digital'. I'd fill in the blanks, but then that would be telling, aye.

      Thank you for the impartial comment. I don't know that it was ever true. I really want Avid to win because our investment has been large, but I can see they have lost their way. There just isn't anyone left to talk to about the future of our business at Avid. The L (user's group) party at Vegas was the depressing cherry on top of the nauseous sundae served up at the press event. When a company goes to a trade show and spends millions and the best they can say in public is we are shipping what we promised two years ago, followed by private conversations that blames all their problems on the previous CEO, any customer has to start looking at other vendors.

      Avid is resting on their laurels hoping desperately to hold on to a little market share until Apple gives up. They really don't have to, their product line IS better. Avid just has to bite the bullet and advertise why. Saving money on marketing and hoping the other guy goes away is a lesson Jobs learned from the other side. I only posted on this board out of pure frustration that Avid didn't understand that.

      Oh well, I'll stop now since the length of my posts seem to bother some. Granted the last one was long, but I took exception to the acusation that I don't know the business or the tools.

      Cal :)

    • Hands - "Call her digital" is one of the few people on this board that makes sense and seems to be impartial. I think you're extremely mistaken if you truly believe that Avid is "riding it out to see how long Apple wants to play"? Are you alright? In case you haven't noticed, Apple has been busy setting Avid's product direction for well over one year now.
      Oh that's right, I forgot, you admitted to not owning an Avid system long ago. That would partially explain your buy recommendation of this stock at $10/share.

    • http://www.dtvprofessional.com/htm/homeset.htm

      Avid Users Lured by Black Lace Teddy

      by Charlie White
      Avid is running scared from Final Cut Pro. The long-term marriage between Avid and its huge corps of customers is getting stale, and those users are getting roving eyes. Final Cut Pro is like that floozy who lures bored men from secure marriages with the seductive temptation of a black lace teddy straining against its fleshy cargo. Alas, she's just the transition babe. There are many fish in the sea, and they're spawning all around Avid. And they all cost a fraction of what Avid is asking its loyal army of users to pay.

      A couple of weeks ago I talked with a high-ranking Avid official face-to-face about this pricing conundrum, and believe me, Avid is no loser company that will just sit there and watch the world go by while it continues to collect big bucks for its industry-standard systems. When I posited that its prices were too high, the official surprised me with his response: He agreed. In fact, that same day we saw the first movement of the gigantic company that changes direction like a cruise ship -- it takes a while to turn one of those big boats around -- Avid announced it was selling a somewhat-crippled version of its HD editing and compositing system, Avid DS|HD, for $85K. That's a big improvement over the previous price for the full version of DS|HD, the cheapest of which was running way over $200K just a few months ago. Expect more price cuts from Avid, some of which are already happening at the reseller level. Meanwhile, other attractive editing systems beckon.

      Aiding and abetting this adultery of NLEs are freefalling computer prices, where Moore's Law is starting to look overly conservative. Yes, computers are speeding up (duh), but even more than before. Intel just released its 2.4GHz P4, based on new architecture that's produced using a .13 micron process. It's not only faster, the new chip is ultimately cheaper, too.

      Where once they would go ahead, for example, and pay the full fare for an airline ticket, now they're looking for bargains. Where once they were married to the idea of shelling out $100K to edit video, now they're leering at that cheap babe in the black lace teddy.

      But it's not just the low-ball products that are nipping at Avid's heels, either -- the company's being assaulted from above, too. I was talking with a Midwestern production facility owner the other day, who told me he thinks Sony is, as he put it, "out-Aviding Avid." This production company proprietor's Sony Xpri HD system can import and export timelines and OMF information to and from his Avid Symphony, and now he's going to be installing new Sony hardware in the Xpri system that will allow him to create dual-stream HD effects in real time, with two graphics on top of that. That's four streams of HDCam (that's compressed, but just a little) effects, in real time. Avid can't do that yet.

      But Sony's gig is up, too. The problem? Unbelievable, gouging, bank-robbing profit margins. The clincher here is, if you're charging upwards of $100,000 for an editing system ($200,000+ for HD) that costs you $4000 to build, you'd better be using that huge profit windfall to cook up some products that no one else can touch, because the low end is gaining on these fat cats.

      So, if I were to put on my wiz hat and stare into the old crystal ball, I'd have to say short-term, Final Cut Pro eats Avid for lunch. Mid-term, Moore's law says computers will be four times as powerful as they are now in about three-and-a-half years, and HDTV has four times the data as standard definition, so figure that one out. Meanwhile, I'm not counting Avid out. After laying off a few hundred employees, it will show us what a cool cat it is, using up another of its nine lives to come roaring back with something none of us even thought of. Long term, we'll

    • Avid earnings were down $28 million from the same period, $92m vs. $118m - a net loss of $3.7 million or $.14 per share.

      Final Cut Pro SD editing systems are about $18K, Avid SD editing systems are about $50K.
      ( wrong, lets try you can get a SD, Uncompressed avid with 2X monitors and 144GBAV storage for 18K, give me a call , ill sell you one)

      Avid HD editing systems cost between $85K - $190K. Final Cut Pro HD editing systems cost about $40K. ( yeah, the pros are lining up to editing HD on Final Cut)


      Avid upgrades are $3000, Final Cut Pro upgrades are $249. ( what upgrades are you talking about. XpressDv upgrade was $99, Xpress Meridien upgrade was from 4 to 4.6 is $200, get your facts straight)

      What company are you going to invest in? ( its Apple and Orange. Apple is all its years has never lead the PC wars and I dont believe they will ever. PC will adj again and make a PC POD. Microsoft will adj. Avid will have XpressDv and all the hip for the Apple will do what is always has.. its will fade.)

      Moreover, how much are you going to spend on an editing system? ( You get what you pay for, Avid has systems from $4K to $80K ,and they all work togethers for a total work flow solution and now they are onto the Metadata )

      Me thinks the tide is turning. (yeah, your meds are not working anymore becuase you dont see how Avid is adjusting. Apple made bigger gains becuases they where in the dump so its easy to gain. )

      • 1 Reply to hands11
      • <snip>
        yeah, the pros are lining up to editing HD on Final Cut)
        <end>

        Pros are lining up to cut almost all movie trailers and bumpers and promos on FCP. That is how MC started

        <snip>
        what upgrades are you talking about. XpressDv upgrade was $99, Xpress Meridien upgrade was from 4 to 4.6 is $200, get your facts straight)
        <end>

        Very true. My response to that note was to make the point that the business had changed enough that you could:
        -upgrade one of your MC 10.x or earlier, which would be a 5 figure upgrade.
        -Purchase a couple FCP systems for the price of another upgrade.
        -Following those 2 steps you could address client's needs at the high end and pump your own margins by doing projects on FCP--throw in AE on a few refurbished Macs and your capital equipment investment just went way down with no significant impact on how well you do for your client.

        <snip>
        (they all work togethers for a total work flow solution and now they are onto the Metadata )
        <end>

        They do NOT all work together, if you have discovered the holy grail to bring ProTools sessions in with little to no effort, please open a company and make our lives easier.

        The statement of "onto the Metadata" does not really make sense. Metadata is not a platform it is data architecutres that help define what a particular piece of media is,what the format is, what transisitions and composites have happened, is it A Roll or B, 24fps of 30fps, who owns it, where it is located, etc. etc. etc.

        As for Avid "being on metadata" Some of Avid's systems support various flavors of OMF metadata with aspects of AAF thrown in. They are often woefully bad at preserving metadata from widely used applications such as Photoshop and AfterEffects and even have problems moving MPEG/DV media and metadata around and between systems. That last bit is why they have a NewsCutter version of XPress. Broadcast's requirements for media formats and metadata are signifificantly different than post production. ProTools has a translater tool, but why on earth they still need a translater after all this time is a great example of lost focus. Every year at NAB, within the first 3 questions at the Press Event is one concerning seamless interoperability between MC and ProTools. If they don't get that fixed soon, Apple will be able to release a FCP systems with a nice FireWire breakout box for audio, base the interaction on QT/MPEG7 dropping them in the middle of media AND gaming as an all-in-one and Now with Apple's purchase of Nothing Real and the solid partnership they are showing with Adobe on Photoshop 8, the other top question at the press event which is usually "when will we be able to get the titling, DVE and compositing from DS to work seamlessly with our stuff?" needs an anser.

        Interoperability, is not just being "onto Metadata" it has a lot to do with the fact that Avid is fighting almost a decade of proprietary media formats in order to bring their stuff together. Apple does not (compare IBM & Msoft)

        <snip>
        (yeah, your meds are not working anymore becuase you dont see how Avid is adjusting. Apple made bigger gains becuases they where in the dump so its easy to gain. )
        <end>

        Perhaps your meds made you miss the comment in the con call about how deferred revenue is going UP; combine that with product release delays and adjustment to prifitability seems far away. One major adjustment, for anyone interested in looking at the Executive Team titles from the 2001 annual report and comparing them to the ones on avid.com, you will see they adjusted by removing General Manager status from Bentevegna and Rockwell titles. Froker, who is running Digi quite well, is the only one who retained it. Ethan Jacks who has been mentioned as a potential replacement for Krall also retained his status. Sadly, Eric Peters being missing made it just how many key losses had ha

    • Right on the pricing issues, but you have to understand post production in media before you give that as a reason for Apple winning. Hardly ever is a price-only decision made on a system in a facility. The ones that do that go out of business fast.

      Things you have to consider, particularly at the high-end, is whether your top people will work on anything but industry-leading tools and whether your client will accept anything less either. Apple made themselves into a player in less than 2 years which is why facilities can buy them not because of price. The genius behind Apple's engineering, marketing and press machine is that they have turned FCP into a tool that is directly compared with an Avid Symphony or Avid DS-HD. Anyone who has worked on these systems *knows* that FCP has a LONG way to go to get even close to the Avid offering.

      But like any really good company Apple has created a solid vision of where they are heading with their system and with price points low it seems relatively painless to take a chance with an FCP system in the facility. What facilities are looking at is upgrading one or two MC 10.x or earlier to the MC 11 release and replacing any remaining systems with FCP. ROI and margins get much better--good enough to pay for some editors to go get FCP certification. Of course this supposes that Avid can get the release out for post and Unity before this Christmas--which was promised last Fall (probably why deferred revenue keeps going up on the balance sheet-anyone catch that during the earnings call?)

      The ONLY reason facilities can consider FCP is that clients will accept FCP cut jobs and that there are skilled FCP editors available. 18 months ago that was not true.

      Why did this happen? Avid lost focus just like DEC, IBM, Wang, Lotus, Novell, etc. Avid thought facilities would wait and stay loyal-- sadly margins are too thin to do that. Aside to Avid Mgmt. blaming Miller and Jenks for lost focus might have worked at NAB 2000 but using it in 2002 seemed thin.

      Why is Apple winning? Apple and Jobs have been there they probably have a real gut feeling for what it's like to be someone like DEC. So they are running fast and hard and they've got some good weapons.

      Take a look at Apple's access to Firewire hardware expertise, the ability to work with their own mfg. line to build focused breakout boxes and the FW deals like they announced recently with Panasonic (targeting HD) and it is only a matter of time before Apple offers a complete set of hardware and software tools--including a very credible ProTools competitor (the product paying for the rest of Avid it seems); along with solid ties to leading edge media storage and content management (amazing how much the Sony, Microsoft, Real and IBM reps at NAB knew about FCP, Apple, MPEG 4, 7 and how it comes together in their products)

      Avid still has time--facilities will buy at least one upgrade and might consider their new asset mgmt stuff if they could just get someone at Avid, a reseller or even someone in direct sales to give an intelligent answer on their asset magmt, metadata and global network strategy that does not refer to Automatic Duck and other AVX plug-ins. With all the casualties at Avid there wasn't even someone at the Avid-L party that had a credible answer.

      As for Apple they seem to be in touch with some great technologists who know what it's going to take to manage lots of digital media The Apple people were honest about the difficulties but had great advice and solutions we could use now.

      So are they DEC or are they IBM? Time will tell.

      • 1 Reply to callherdigital
      • You make some very accurate points - and to answer your question: Are they DEC or IBM - put me down for DEC. I say this because in many of the companies that you referenced as examples (DEC, IBM, Novell, Lotus)the dominance in their specific niche changed and people bought competitive products for many reasons beyond pricing (as you also outlined).
        Avid lost more than focus, they lost credibility with their customers, their resellers and most importantly, their employees. You are also correct in that Apple is in touch with great technologists, some of whom worked for Avid.
        Is there still time? I doubt it. Not unless the board makes significant, wholesale changes. We'll soon find out.

 
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