Avid Narrows Q4 Loss

Revenue declines, but company sees potential rebound in broadcast
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Editing and storage supplier Avid reported fourth-quarter 2009 revenues of $174.7 million, compared to $206.7 million for the same period in 2008, and recorded a net loss for the quarter of $17.9 million, or $0.48 per share, compared to a loss of $100.3 million, or $2.71 per share, in the fourth quarter of 2008.

Revenues for the 2009 fiscal year were $629.0 million, compared to revenues of $844.9 million for 2008, and the net loss for 2009 was $68.4 million, or $1.83 per share, compared to a net loss of $198.2 million, or $5.28 per share, for 2008. The net loss for 2009 included $55.7 million of amortization, stock-based compensation, restructuring charges, acquisition related costs, net gains from divested product lines and related tax adjustments.

About 7% of the 26% drop in Q4 revenues was attributable to discontinued product lines and international currency fluctuations, said Avid CFO Ken Sexton. Revenues for Avid's video division were $106.2 million, compared to $134.3 million for the same period last year, though Sexton said sales of professional editing equipment were strong.

Sexton said that an investigation into Avid's Q3 2009 results, which resulted in the company restating its revenue figures due to errors in the accounting of international shipments, had been successfully concluded and that no further changes to Avid's historical results were required. He added that Avid will be relocating its headquarters to Burlington, Mass. when its current lease on office space in Tewksbury, Mass. expires in June.

Avid chairman and CEO Gary Greenfield said there have been have "a number of signs of a rebound in the broadcast sector" and added that Avid's acquisition earlier this month of German asset management firm Blue Order should help that growth, particularly in high-end systems for large customers. He said that while Avid may not be winning share in the editing space from its less-expensive competitor Apple Final Cut Pro, it's "not seeing the erosion we were seeing in the high-end market" and that the company had won a multimillion-dollar deal from a large broadcaster who had switched from Final Cut to Avid.

Greenfield said that Avid is involved in several other large broadcast deals, ranging roughly from $2 to $9 million in scope. He added that smaller station groups now seem ready to begin investing again in HD conversions after putting those plans on hold in 2009. He estimated that only 25 to 30% of local stations have converted their news production to HD.

Avid has already added stereoscopic 3D capability into its editing systems, and Greenfield proclaimed 3D to be a significant growth opportunity going forward, though not in the near term.

"Customers are very interested in producing and broadcasting 3D content," said Greenfield. "We continue to see this as an area of growth for Avid, as these projects require more edit stations and storage needs."

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