Posts Tagged ‘Kirk Arnold’

Avid Divests Consumer Business, Announces 20 Percent Staff Reduction

Broadcast Vendor M&A | Posted by Joe Zaller
Jul 02 2012

Avid announced that it is selling off its struggling consumer business in a series of separate transactions.  Avid also said that it is undertaking a 20 percent workforce reduction, which includes the employees being transferred as part of the sale of its consumer business.

Avid says that these actions will enable it to focus on its media enterprise and post production, and to drive improved operating performance. The company also said it will keep its Pro Tools audio processing product line.

Avid will sell its consumer business through a series of transactions, including the following:

  • A group of audio assets will be sold to inMusic, the parent company of Akai Professional, Alesis and Numark, among others for approximately $13.9m, subject to adjustment for closing inventory levels, with approximately $2 million to be held in escrow as security for the representations, warranties, covenants and agreements. The products involved in this transaction include M-Audio brand keyboards, controllers, interfaces, speakers and digital DJ equipment and other product lines.

 

  • A group of video assets will be sold to Corel Corporation for $3m, with $600,000 to be held in escrow as security for the representations, warranties, covenants and agreements. The products involved in this transaction include Avid Studio, Pinnacle Studio, and the Avid Studio App for the Apple iPad®, as well as other legacy video capture products. Avid bought Pinnacle in 2005 for $462m in cash & stock.

 

 

The divested product lines contributed approximately $91 million of Avid’s 2011 revenue of $677 million. As part of the transactions, certain employees of Avid will transfer to each acquiring company.

Both asset sales are expected to be consummated on July 2, 2012.

Avid will continue to develop and sell its industry-leading Pro Tools line of software and hardware, as well as associated I/O devices including Mbox and Fast Track.

Avid’s consumer business has been a drag on the company’s performance for some time, even as it improved its standing in professional markets. Historically, the consumer business accounted for approximately 20% of Avid’s overall revenue, but this has been declined to 17% of total revenue in the first quarter of 2012.

For the first quarter of 2012, Avid’s consumer business was down 27% versus the same period a year ago. In the first quarter of 2012, the product mix in the consumer segment was approximately 85% audio and 15% video.

 

20 Percent Workforce Reduction

Avid also said it will reduce its overall headcount by approximately 20 percent, including the staff transferred through the sales of its audio assets.  Avid said it will complete this program during the third quarter of 2012, and expects to incur total expenses relating to termination benefits and facility costs associated with the reduction in force and related actions of approximately $19 million to $23 million, which primarily represent cash expenditures.

In addition to the termination of rank and file employees, two top Avid executives will also be leaving the company as part of this process. Company COO Kirk Arnold, and VP finance Jason Burke will also be leaving the company.  The COO position will not be replaced, but the company said it will be appointing a new VP of finance.

 Avid says the sale of its consumer assets , combined with the workforce reduction will save it approximately $80m on an annualized basis.  The company says these savings will impact both its cost of sales and operating expenses, and will improve its overall gross margins in the second half of 2012 and further improve in 2013.

 

This is the third set of major layoffs at Avid in the couple of years. 

  • In October 2011, Avid announced that was reducing its staff by 10%, and closing a facility in Irwindale, CA

 

  •  In December of 2010, Avid announced that it planned to restructure its operations during the first half of 2011 by eliminating positions “in lower growth geographies and markets,” while reinvesting in “more strategic areas with greater opportunity for growth.”

 

“The changes we are announcing today make Avid a more focused and agile company,” said Gary Greenfield, CEO of Avid. “By streamlining and simplifying operations, we expect to deliver improved financial performance and partner more closely with our enterprise and professional customers. Our objective remains to provide these customers with the innovative solutions that allow them to create the most listened to, most watched and most loved media in the world. I’m excited about our future prospects.”

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Related Content:

Press release: Avid Divests Consumer Businesses and Streamlines Operations

Avid Revenue Drops Nine Percent in Q1 2012 Due to Weakness in Consumer Business

Avid To Cut Workforce by 10%, Close Facility, Take Q4 Charge of $10m-11m

 Avid to Cut Jobs, Close Some Facilities During First Half of 2011

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© Devoncroft Partners 2012. All Rights Reserved.

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Devoncroft Digest July 24, 2010 – Earnings Season Begins, More Broadcast M+A (and an IPO), Echolab Rumors

broadcast industry technology trends, broadcast industry trends, broadcast technology market research, Broadcast technology vendor financials, Broadcast Vendor Brand Research, Devoncroft Digest, Top Broadcast Vendor Brands | Posted by Joe Zaller
Jul 24 2010

The Devoncroft Digest is a semi-regular amalgamation of news items I’ve seen recently.  Here are a few of the things that have caught my eye recently.

Earnings Season Kicks Off for Broadcasters and Broadcast Tech Vendors:

Quarterly earnings are starting to roll in from both broadcasters and broadcast technology vendors.  For those who are on an annual fiscal year, it’s a chance to see how the first half of the year went, and to hear management thoughts on the second half of 2010.

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Broadcast Technology Vendor Earnings:

Avid reported their numbers for the second quarter. Sales for the quarter were $162.2m, an 8% y/y increase – and the company pointed out that this was the first quarter of y/y growth for both audio and video since 1997.  The company’s shares jumped on the news.

While discussing uses of cash on the company’s earnings call, Avid executives talked about the amount of cash used for the Euphonix acquisition.  I was not aware of the purchase price for Euphonix, but it turns out that according to an SEC filing, Avid paid 17.6m for Euphonix, including cash of $12.6m and cash of $5m.

For more on Avid’s results, here’s a link to a transcript of Avid’s Q2 earnings call, and an article from Barrons about the results.   

Speaking of Avid, Post Magazine’s Jonathan Moser recently published an interesting Q&A with Avid COO Kirk Arnold about present & future status of the company.  In my opinion, both Arnold and CEO Gary Greenfield have done a good job recently with this type of interview.  One of Avid’s strengths is their user community and the company is clearly working to communicate with their base.  Here’s another example.

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Barco reported strong results for the company’s Q2 and first half of 2010.  In the earnings press release, company President & CEO Eric Van Zele said that Q210 “Must have been our best quarter ever.”  Van Zele also said that Barco is “experiencing explosive growth in demand for our digital cinema projectors and are working very hard to deal with the supply chain issues this creates.”

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Storage vendor Isilon also reported their Q2 numbers this week, and they were pretty good.  The company’s Q2 revenues of $45.1m represented increases of 15% q/q and 56% y/y respectively. The company also had positive net income in the quarter.  Shares jumped 18% on the news.  With Isilon apparently firing on all cylinders and Omneon now part of Harmonic, the storage space is going to be interesting to watch over the next year or so.

IPTV provider KIT Digital published strong preliminary results for their Q2.  In an upbeat press release, the company said that its Q2 revenues of “at least $22.7m” were up by more than 110%.  The company also said that its EBITDA for the quarter would be at least $4 Million

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Broadcaster and Platform Operator Earnings:

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Broadcaster LIN TV reported 2Q revenues of 99.5m, which represents a 21% y/y increase.  The company’s earnings release highlighted the fact that digital revenues were up by 44% y/y, and that political revenues more than doubled versus last year.  Lin President and CEO Vincent Sadusky said: “Our results demonstrate continued, sustained improvement over 2009. Television advertising has experienced a strong recovery and our digital business, which now constitutes 15% of our total revenues, continues to grow and differentiate us as a local multimedia company.”

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According to industry website TVNewswCheck, The McGraw-Hill Companies reported that its Broadcasting Group’s revenue grew by 24% to $25.3 million in the second quarter compared to the same period last year. Increases in national, local and political advertising all contributed to the improved performance.  The company as a whole reported net income for the second quarter of 2010 increased by 16.4%, or $27.0 million, to $191.1 million. Revenue in the second quarter was up 0.6% to $1.5 billion.

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Media General reported that the company’s broadcast revenue rose 13% in the second quarter, driven by increases in automotive and political advertising (publishing revenues fell by 7%). The company’s digital revenues rose by 8% during the quarter.  The company issued upbeat guidance for its broadcast properties saying, that “Broadcast revenues in the third quarter are expected to increase more than 20 percent, mostly reflecting significant Political revenues.”

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Finally, DVD rental and streaming video provider Netflix reported its Q2 results this week.  Although the company’s subscriber, revenue and net income numbers all numbers increased, it was not enough for investors who were looking for higher sales revenues.  The stock tanked.

For more on Netflix, check out the take from website VideoNuze, who penned an interesting post called 5 Key Takeaways from Netflix’s Q2 ’10 Results.

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Broadcast M&A

Echolab Rumors Continue

Since Echolab was suddenly put into liquidation, there has been great speculation about what would happen to the company’s IPR – particularly the Atem production switcher line up.  Well if rumors are to be believed, Blackmagic Designs is set to announce that they have purchased the assets of Echolab.  This is information is not confirmed, but I have spoken to several people about it.  

As many know, Blackmagic made headlines earlier this year when they purchased color correction specialist Da Vinci.    Coincidentally, TVB Europe just published an article about how Blackmagic took Da Vinci’s $200,000+ products into a sub-$1,000 product for the Mac and kept all the functionality.   If this rumor is true, it will certainly be interesting to see what Blackmagic has in store for Echolab’s Atem product line.  Watch this space. 

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Vitec Multimedia (not to be confused with the Vitec Group) announced the purchase of the Focus Enhancements’ Systems Group.  In the press release announcing the deal, Philippe Wetzel, CEO of VITEC Multimedia said “In combination with our recent acquisition of Optibase, this acquisition furthers our objective to provide a complete line of advanced digital video solutions to our customers around the globe. With innovation at its core, the VITEC R&D division — now with more than 100 esteemed engineers — is uniquely positioned to deliver innovative solutions for a wide range of advanced digital video applications — managing the entire video process from source to display.

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Vizrt announced that it has completed the acquisition of Adactus by buying the additional 71% of the company that it did not already own

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Other Broadcast Technology Vendor News

Vizrt’s Chief Commercial Officer appears to have left the company.  According to a press release from online gaming firm 888, David Zerah has become the managing director of Dragonfish.  While at Vizrt Zerah spent seven years as EVP of worldwide sales before becoming CCO.  Vizrt has not yet announced a replacement.

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3D News

The official IBC blog had an interesting entry on 3DTV the other day, which says that 3D will probably only impact the industry in “small dimensions”.

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OTT Video News

As mentioned above, Netflix reported their Q2 revenues.

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NewTeeVee Reports that Redbox readying a streaming offering.  Streaming media expert Dan Rayburn says Redbox Won’t Challenge Netflix’s Streaming Service, Here’s Why

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Digital Cinema

According to the Wall Street Journal, Imax has signed an exclusive 2-year deal with privately held Laser Light Engines. The company says that the resulting laser-power projectors will deliver brighter images for digital cinema, which will be especially beneficial for 3D.

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3D News – RealD Goes Public

3D provider RealD went public this week in a $200m IPO, which raised 33% more than expected, a testament to the strong interest in all things 3D.  The company’s shares were up 22% on its first day as a public company.

The company’s 100+ page IPO documents are worth reading for an overview of the company’s financials as well as the state of the 3D and Digital Cinema Markets.  Files 100+ Page IPO Doc. Worth Reading for Financials and #3D Industry Overview. #3DTV #Broadcast http://bit.ly/bCanRM

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Market Research Note of the Week – Quality Rankings of Broadcast Technology Vendors

This article looks at how a global sample of several thousand broadcast professionals ranked broadcast technology vendors for one of the most important metrics for any technology company: quality.

The broadcast industry prides itself on the fidelity of its sound and images, so the perception of quality is a very important metric for broadcast technology vendors. Many vendors use quality as one of the key components of their market positioning.

To determine the market’s perception of the quality of broadcast technology vendors, respondents to the 2010 Big Broadcast Survey were asked to rank broadcast technology vendor brands for “quality” on a scale of one to 10, with 10 being best in the market and one being the worst.

As with the top 30 innovation rankings published earlier, this list contains a broad mix of vendors including both audio and video companies. There are also interesting similarities and differences in terms of the types of products produced, geographic location and company.

To read the full article, including analysis of the findings, click here http://bit.ly/cY2nZO

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