Autodesk Says Media & Entertainment Revenue Fell 10 Percent in Q2 FY 2013, Will Restructure Overall Business Strategy

Posted by Joe Zaller
Aug 23 2012

Autodesk announced that its Media & Entertainment (M&E) revenue for the second quarter of its fiscal 2013 was $49m, a decrease of 10% versus the same period a year ago, and a decrease of 4% versus the previous quarter.

On the company’s earnings conference call, Autodesk CEO Carl Bass attributed the decline in M&E revenue during the quarter to weakness in India and delayed shipments of new products.

The potential for M&E revenue decline was telegraphed last quarter by Bass, who said at that time that the company expects its M&E revenue to decline over time as Autodesk incorporates greater functionality into its design suites.

M&E Gross margins for the quarter were 80%, down from 82% last quarter.

Media & Entertainment revenue for the first half of fiscal 2013 was $99m

 

Lowered Guidance Crushes Stock:

Autodesk said that it now expects to achieve overall sales growth of 4% to 6% in fiscal 2013, down from the company’s previous guidance of at least 10%.  The company also said its operating margins will decrease by 2.1% during the fiscal year, rather than rising by 1.2% as previously announced.

The results sent shares down by more than 20% in after-hours trading,

 

Autodesk to Restructure Overall Business Structure

Bass said the company’s total results for the quarter were disappointing, and that the company has taken the decision to restructure its overall business in order to focus on what it described as the continuing shift to cloud and mobile computing. The company anticipates taking a pre-tax charge in the range of $50m to $60m in connection with this restructuring program.

The company said it will be reducing its overall staffing levels in the near-term, but will continue to invest in key development areas. Autodesk also intends to consolidate certain leased facilities.

“This restructuring is squarely focused on our continued transformation and shift to more cloud and mobile computing,” said Bass. “This action allows us to continue to invest in recruiting and hiring people who can bring Autodesk the skills and experience that are critical for achieving our mid and long-term goals. As part of the ongoing platform shift, it’s clear to us that design and engineering software will move to cloud and mobile platforms. Cloud and mobile has been a major investment area for Autodesk over the past couple of years and this restructuring will accelerate our progress as we intend to further invest in employees with expertise and skill sets essential to this transition. Additionally, this restructuring helps us reduce costs and streamline the organization as a continuation of the activities we began earlier this year.”

Separately, in response to the company’s second quarter performance, the uneven economic environment, and outlook for the rest of the year, Autodesk is implementing further spend management measures, such as reducing non-sales related travel and the number of its contractors.

It is unclear what impact these action will have on the company’s broadcast and post production-oriented business lines, which make up less than 10% of the Autodesk’s total revenue.

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Related Content:

Press Release:  Autodesk Reports Second Quarter Results

Autodesk Q2 FY 2013 Earnings Call Transcript

Previous quarter: Autodesk Media & Entertainment Revenue Slips 5 Percent in Q1 2013

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