Posts Tagged ‘layoffs’

Orad Revenue Declines 29% in Q2 2013, Announces 10% Workforce Reduction

Broadcast technology vendor financials, Quarterly Results | Posted by Joe Zaller
Aug 20 2013

Graphics and media asset management (MAM) provider Orad reported that its revenue for the second quarter of 2013 was $7.2m, down 29% versus the same period a year ago, and up 1% versus the previous quarter.

 “The lower level of activity which started in Q3 2012, mostly due to the economic situation in Europe, continued through the second quarter of 2013, as reflected in the disappointing results for the second quarter and also for the first half of the year,” said Orad CEO Avi Sharir.

Orad has been struggling since the third quarter of last year, particularly in Europe, which is the company’s largest market. In February 2013, the Orad issued a profit warning for the full year 2012, saying at that time that it expected its profit to fall by about 34 percent.

The company’s results in Q2 2013 show that the company continues to struggle in the European market. However, the company also reported a bright spot in an otherwise disappointing quarter, saying that its order intake increased during the quarter. “We are happy to announce that during Q2 2013 we booked the highest volume of orders ever in Orad’s history, setting a new record,” said Sharir.

Orad’s product revenue in the quarter was $5.6m (78% of total revenue), down 33% versus the same period last year, and up 7% versus the previous quarter.  Service revenue in the quarter was $1.6m, down 11% versus last year, and down 14% versus the previous quarter.

The net loss for the second quarter of 2013 was $1.3m, or -$0.11 per share, compared to a net profit of $732,000 or $0.06per share last year, and a net loss of $944,000, or $0.08 per share last quarter. 

Including additional charges in the quarter, the total comprehensive loss for the second quarter of 2013 was $1.375m, compared to total comprehensive income of $507,000 last year, and a total comprehensive loss of $1m last quarter.

Gross margins for the quarter were 63% versus 69% last year, and 65% last quarter.

The operating loss for the quarter was $1.46m, compared to an operating profit of $1m last year, and and operating loss of $657,000 last quarter.

Operating expenses for the quarter were $6m (83% of total revenue), down slightly from last year, and up 14% versus the previous quarter.

R&D costs for the second quarter of 2013 were $1.45m, up 5% versus the same period last year, and down 5% compared to last quarter.  R&D costs were 20% of total revenue in the quarter, compared to 14% of total revenue last year, and 21% of total revenue last quarter.

Sales and marketing expenses in the quarter were $3.7m, down 2% versus the same period last year, and up 29% compared to last quarter.  Sales and marketing costs accounted for 51% of total revenue in the quarter, compared to 37% of total revenue last year, and 40% of total revenue last quarter.

Following the company’s sharp rise in sales and marketing costs this quarter, Sharir says that Orad will continue to spend in this area.  “We also continue to invest in our sales and marketing infrastructure and in particular have put emphasis on strengthening our North America office with the addition of a few senior people,” he said.

General and administrative expenses in the quarter were $853,000, down 4% versus the same period last year, and down 4% compared to last quarter.  G&A costs accounted for 12% of total revenue in the quarter, compared to 9% of total revenue last year, and 12% of total revenue last quarter.

The company ended the quarter with $5.6m in cash equivalents and restricted cash, compared to $9.6m last year, and $7.2m last quarter.

 

Announcement of 10 Percent Workforce Reduction

Although the company says it had strong order intake during the second quarter of 2013, Sharir says it’s “too early to tell if we reached a turning point in the level of activity, but it is certainly a very encouraging sign.”

“As a measure of caution, we have decided to align our operating expenses with our current financial results, and have decided to reorganize some departments, reducing our overall headcount by 10% and trim other operational costs as well. The result of these measures will be seen in the lower cost of operating expenses expected as of the fourth quarter of 2013. The decrease in our operational expenses will not affect our continuous focus on strategic initiatives.”

 

First Half 2013 Results

For the first six months of 2013, Orad’s revenue was $14.4m, down 24.7% versus the first half of 2012.

The net loss for the first six months of 2013 was $2.2m, compared to net income of $1.7m for the first half of 2012.

Gross Margins for the first half of 2013 were 64%, down from 69% for the first six months of 2012.

The operating loss for the first six months of 2013 was $2.1m compared to operating income of $1.8m for the first six months of 2012.

Operating expenses in the first six months of 2013 were $11.3m, or 78% of total revenue, down 1% versus last year when total operating expenses accounted for 60% of overall revenue.

R&D expenses for the first half of 2013 was $3m, or 20% of total revenue, up 9% versus the same period a year ago when R&D accounted for 15% of revenue,

Sales & marketing expenses for the first six months of 2013 $6.6m, or 45% of total revenue, down 3% % versus the first half of 2012 when sales and marketing accounted for 45% of revenue.

General and administrative expenses for the first six months of 2013 were $1.7m, or 12% of total revenue, down 9% versus the first half of 2012 when G&A expenses were or 10% of total revenue.

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Related Content:

Press Release: Orad Results for the second quarter and for six months of 2013

Previous Year: Revenue Up, Profit Down at Orad in Q2 2012

Previous Quarter: Orad: Results for the First Quarter

Orad Warns of Lower Revenue, Net Loss in Q4 2012 of 2013

 

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Hego Merger Drives 39 Percent Revenue Increase for Chyron in Q2 2013

Broadcast technology vendor financials, Quarterly Results | Posted by Joe Zaller
Aug 12 2013

Broadcast graphics specialist Chyron reported that its revenue for the second quarter of 2013 was $10.7m, up 39% versus the same period a year ago, and up 34% versus the previous quarter.

These results include revenue from Hego, which was acquired by Chyron, from May 22, 2013 through June 30, 2013.

Excluding the $2.3m contribution from the sales of Hego products and services, the company’s revenue was up $700,000 or 9 percent, versus the same period a year ago.

The net loss for the quarter was $2.1m, or $0.09 per share, compared to a net loss of $630,000 or $0.04 per share last year, and a net loss of $921,000, or $0.05 last quarter (Chyron issued new share as part of the Hego merger process).

The operating loss for the second quarter of 2013 was $1.9m, compared to an operating loss of $1.1m for the same period last year, and an operating loss of $810,000 last quarter.

The company’s net loss and operating loss were both impacted by transaction costs associated with Chyron’s merger with Hego AB. The company says that when one-time costs,  including Hego merger-related expenses, restructuring costs and a valuation adjustment for contingent consideration related to the Hego merger in second quarter results, it posted net income of $800,000, and an operating profit of $900,000.

Service revenue in the second quarter of 2013 was $3.97m in the quarter, or 37% or total revenue.  Product revenue in the quarter was $6.74m.

Because the company did not break out the percentage of product versus service revenue from Hego, it is difficult to do a direct comparison with previous periods.

In the first quarter of 2013, the company’s revenue was split 75%/25% in favor of product sales.

Gross margins for the quarter were 68.4%, down from 69.2% last year, and down from 71% last quarter.

Operating expenses for the second quarter of 2013 were $9.2m. up 44% versus the same period a year ago, and up  41% versus the previous quarter.

R&D costs in the quarter were $2.3m, up 21% versus the same quarter last year, primarily due to the inclusion of $400,000 in Hego R&D expenses.

Sales and marketing expenses were $3.3m, down 6% versus the second quarter 2012, primarily due to inclusion of $200,000 of Hego costs, and $20,000 in expense from amortization of intangibles from the Hego merger, offset by a $600,000 decrease in Chyron &M expenses.

G&A expenses in the quarter were $3.6m, an increase 260% versus last year.  The company attributed the big jump in G&A coasts to inclusion of $300,000 in Hego G&A expenses and a $2.3m increase in Chyron G&A expenses, including $1.6m of merger-related expenses, severance costs of $600,000, and equity-based compensation of $400,000.

The company ended the quarter with $2.19m in cash, down from $2.3m last quarter.

“The second quarter was a pivotal quarter in the formation of ChyronHego,” said ChyronHego CEO Michael Wellesley-Wesley. “Having effected an extensive rebranding, we presented the combined company to our customers at the NAB tradeshow in April and received a very encouraging response. In early May, 2013, we eliminated a number of Chyron positions primarily in the United States, thus completing a restructuring initiative that began in 2012, and on May 22, 2013, we formally completed our merger with Hego AB to form ChyronHego. We’ve now been conducting business as a brand new company for just over two months. We have won significant new business in terms of product sales with BT Sport and ITV Regional News in the UK and major US and LatAm networks, as well as with US TV Station Groups. In the area of multi-year sports production services contracts, Hego announced its largest ever contract with the German Soccer League, during the quarter. I am optimistic regarding our business prospects for the second half of 2013.

“The strategic thinking underpinning the creation of ChyronHego is to create a market leading company in the fields of TV Graphics, Data Visualization and Production Services for ‘Live’ TV and Online News and Sports production. This merger creates a strong, global graphics company that is committed to innovation and to evolving existing products and services to support our customers in the future. Our second quarter financial results were inevitably impacted by one-time cash and non-cash expenses associated with the transaction. We anticipate that the compelling financial logic for the transaction will become clearer as we progress through the second half of 2013 and into 2014.”

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Related Content:

Press Release: ChyronHego Reports Financial Results for the Second Quarter Ended June 30, 2013

Previous Quarter: Chyron Revenue Up 2 Percent in Q1 2013, Gives Update on Merger, Layoffs, and Potential NASDAQ Delisting

Previous Year: Chyron Revenue Declines 18 Percent in Q2 2012

Chyron Lays Off 20 Employees, Says it will Save $3 Million per Year

Chyron Receives Another Delisting Notice From NASDAQ

More Broadcast Vendor M&A: Chyron to Acquire Hego Group in All-Stock Deal

Chyron – Hego Stock Purchase Agreement

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Chyron Revenue Up 2 Percent in Q1 2013, Gives Update on Merger, Layoffs, and Potential NASDAQ Delisting

Broadcast technology vendor financials, Broadcast Vendor M&A, Quarterly Results, SEC Filings | Posted by Joe Zaller
May 10 2013

Broadcast graphics specialist Chyron reported that its revenue for the first quarter of 2013 was $8.01m, up 2% versus the same period a year ago, and up 8% versus the previous quarter.

The net loss for the quarter was $921,000, or $0.05 per share, compared to a net loss of $951,000, or $0.06 per share last year, and a net loss of $20m, or $1.17 per share, last quarter, when the company took a $19.5m valuation allowance against the company’s deferred tax assets (see below for implications).

The operating loss for the first quarter of 2013 was $810,000, compared to an operating loss of $1.074m last year, and an operating loss of $570,000 last quarter.

The company’s net loss and operating loss were both impacted by transaction costs associated with Chyron’s pending merger with Hego AB, which was announced in March 2013. Excluding Hego transaction costs, net loss would have been $220,000, and the operating loss would have been $110,000.

The company’s service revenue, which includes the sales of its AXIS cloud-based graphics service, maintenance agreements, training and creative services was $2.04m in the quarter, or 25% or total revenue. This is a decrease of 2% versus the same period a year ago, and a decrease of 7% versus the previous quarter.  The company the lower service revenue to lower revenues from training and other professional services offset by increased sales of software and hardware maintenance contracts for broadcast graphics products.

Product revenue in the quarter was $5.97m (75% of total revenue), an increase of 3% versus Q1 2012, and an increase of 15% versus last quarter.  The company said it experienced a slight increase in product revenue as a result of an improvement in market share in Asia and a major program upgrade in our European market. However, sales fell in North America, due to price competition and weak demand. Sales in Latin America also declined during the quarter.

Gross margins for the quarter were 71%, up from 70% last year, and up from 69.1% last quarter.

Operating expenses for the first quarter of 2013 were $6.53, up 1% compared to last year, and up 15% versus the previous quarter. Excluding Hego transaction costs, operating expenses would have been $5.84m, or 12% lower than the same period a year ago.

Last quarter, Chyron combined its reporting of sales and G&A expenses.  This quarter it did not break out its expenses at all, making it difficult to determine the full impact of the cost-cutting exercise that the company embarked upon several quarters ago.  However, the company did say that its expenses in both research and development and sales and marketing, were essentially flat with the previous year when Hego transaction costs are excluded.

The company ended the quarter with $2.3m in cash, versus $2.4m last quarter.

 

Update on Latest Round of Staff Layoffs

Prior to the release of its Q1 2013 earnings, Chyron disclosed that it has cut the size of its workforce by 20 employees as part of a reorganization plan designed to “reduce operating expenses while maintaining its focus on strategic initiatives.”

The company says that it will take a charge of approximately $950,000 in Q2 2013 to cover the cost of the staff reduction, and that these actions will result in savings of approximately $3m on an annualized basis, beginning in the third quarter of 2013.

Chyron has reduced the size of its employee base by more than 30% since the end of Q1 2012.  At that time, the company had 126 employees.  There were 107 employees at the end of Q1 2013; and there are now 86 employees following the latest round of staff cuts.

Chyron CEO Michael Wellesley-Wesley told investors that the layoffs came after “eight weeks of very, very rigorous studying and discussion as to where these changes should be made,” and that the cuts were made “across the board.”

According to Wellesley-Wesley, the only departments not impacted by the layoffs were the company’s customer service department and customer-facing product specialists. Sales, engineering, internal administration, and “quite a layer of mid and senior management figures were affected,” he said.

The company will gain an additional 90 – 100 full-time employees following the completion of its pending merger with Hego AB.

 

Update on Potential Nasdaq Delisting:

In March 2013, Chyron received a letter from The NASDAQ Stock Market notifying the company that it is no longer in compliance with the minimum stockholders’ equity requirement for continued listing on the NASDAQ Global Market because its stockholder’s equity has fallen below the minimum $10m threshold set by NASDAQ Listing Rule 5450(b)(1)(A).

If it does not regain compliance with the Rule, Chyron’s shares could be delisted from Nasdaq.

On the company’s earnings call, Wellesley-Wesley said that the company’s stockholders equity fell below this level at the end of the previous quarter as the result of the company taking a $19.5m valuation allowance against the company’s deferred tax assets (described above).

Wellesley-Wesley said that because this allowance reduced the company’s shareholders’ equity by $19.5m, the company ended the year 2012 with shareholders’ equity of about $1.9m, which put it in violation of Nasdaq’s listing requirement.

Wellesley-Wesley said the company has filed a plan of compliance with Nasdaq, and that a primary element of this plan is the company’s proposed merger with Hego, which the company believes will bring with it enough shareholders’ equity to bring the company’s total about $10m.

However, Wellesley-Wesley cautioned that regaining compliance with Rule 5450(b)(1)(A) was not a certainty because of additional one-time charges will be recorded in the second quarter of 2013.  These include a charge of approximately $950,000 for the headcount reduction that the company enacted at the beginning of May 2013,  and a second charge of approximately $1.3m due to the early vesting of equity awards upon the closing of  the Hego transaction.

Nevertheless, Wellesley-Wesley assured shareholders: “The bottom line is this – these shares are not going to be delisted. There are all kinds of ways that we can get back in compliance. We’ll make sure that we don’t get delisted.”

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Related Content:

Press Release: Chyron Reports Financial Results for the First Quarter 2013

Previous Quarter: Chyron Posts Another Loss in Q4 2012 as Revenue Continues to Decline

Previous Year: Revenue and Losses Up at Chyron in Q1 2012

Chyron Lays Off 20 Employees, Says it will Save $3 Million per Year

Chyron Receives Another Delisting Notice From NASDAQ

More Broadcast Vendor M&A: Chyron to Acquire Hego Group in All-Stock Deal

Chyron – Hego Stock Purchase Agreement

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Chyron Lays Off 20 Employees, Says it will Save $3 Million per Year

broadcast technology market research | Posted by Joe Zaller
May 08 2013

Broadcast Graphics specialist Chyron Corporation said it has cut the size of its workforce by 20 employees as part of a reorganization plan designed to “reduce operating expenses while maintaining its focus on strategic initiatives.”

The company estimates that it will save approximately $3m on an annualized basis as the result of the layoffs, beginning in the third quarter of 2013.

All terminated employees will receive severance pay and benefits, as well as an adjustment in the terms of their stock option and/or restricted stock unit (“RSU”) equity awards outstanding on their termination date. The affected employees’ RSU awards will be modified to state that they will vest on June 24, 2013 if the impacted employee signs a separation agreement from the company.

The company says that expenses for severance, benefits and changes in equity awards will be approximately $950,000, with severance benefits accounting for about $600,000, and costs relating to the changes in the equity awards making up the remainder.

These charges will be recorded as an expense in Q2 2013.

These new staff cuts continues the trend that stated in Q3 2013, when Chyron appeared to shift from its previous strategy of increasing engineering, sales, and marketing expenses in anticipation of increased revenue from both new products and cyclical spending from broadcasters gearing up for the 2012 Olympics and presidential elections.

In anticipation  of a strong 2012 Chyron increased its spending across the board, and by the first quarter of 2012 the company’s operating expenses had jumped 20% versus the previous year, including 31% y/y increase in sales and marketing costs, and a 19% y/y increase in R&D spending.

However, when the anticipated new revenues had not materialized by the third quarter of 2012, Chyron CEO Michael Wellesley-Wesley told investors on the company’s Q3 2012 earnings call: “I can assure you that we’ve taken and will continue to take the appropriate steps to align our operating expenses with the current business climate.”  At that time, Wellesley-Wesley said the company had scaled back investments in product development and that the company would also be reducing headcount.  On the company’s Q3 2012 earnings call Wellesley-Wesley told analysts “about 60% of our costs are related directly to people and so it’s difficult to make meaningful reductions in expense — operating expenses — without addressing that fact. The steps we’ve taken will certainly reduce OpEx by 5% or more going forward and you will begin to see the real impact of that take effect in Q1 next year.”

With the announcement of the latest round of layoffs, Chyron is now saying that the impact of these additional cuts will begin to materialize in Q3 2013.

For the full year 2012, Chyron had revenue of $30.2m, down 4% versus 2011, and recorded a net loss of $22.3m, or $1.31 per share. $19.5m of the company’s net loss was valuation allowance against the company’s deferred tax assets.

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Related Content:

Chyron 8K Filing: Discloses Staff Reduction

More Broadcast Vendor M&A: Chyron to Acquire Hego Group in All-Stock Deal

Chyron Posts Another Loss in Q4 2012 as Revenue Continues to Decline

Chyron Cuts Expenses as Revenue Declines 3 Percent in Q3 2012

Chyron Q3 2012 Earnings Call Transcript

 

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Chyron Cuts Expenses as Revenue Declines 3 Percent in Q3 2012

Broadcast technology vendor financials, Quarterly Results | Posted by Joe Zaller
Nov 08 2012

Broadcast graphics specialist Chyron reported that its revenue for the third quarter of 2012 was $7.25m, down 3% versus the same period a year ago, and down 6% versus the previous quarter.

The net loss for the quarter was $700,000, or $0.04 per share, versus a net loss of $3.49m, or $.21 per share last year, and a net loss of $600,000 last quarter. The company’s operating loss for the quarter was $1m, versus an operating loss of $870,000 last year, and operating loss of $1.1m last quarter.

Chyron CEO Michael Wellesley-Wesley attributed the ongoing losses to “a slowdown in our product revenue stream as a result of delays in spending as broadcasters emphasize cost control and reschedule their capital expenditures. This decline was experienced in North America and more markedly in Europe where many countries’ economies have stalled.”

Investors sent the shares lower on the results.  Chyron’s share price has been below $1 since October 1, 2012, prompting speculation that it may be delisted from public markets.
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Product revenue in the third quarter was $4.86m (67% of total revenue) down 16% versus the same period a year ago, and down 9% versus the previous quarter.
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Service revenue in the quarter which includes the sales of its AXIS cloud-based graphics service, maintenance agreements, training and creative services was $2.39m, up 13% versus both the previous year and the previous quarter, despite a decline in creative services revenue.

Service revenue contributed 33% of total revenue, versus 28% last year, and 26% of total revenue last quarter.

Gross margins for the third quarter were 67.9%, down from 69.0% last year, and 69.2% last quarter.  The company attributed the decrease in gross margins to product mix and sales discounting.

Operating expenses for the third quarter were $5.9 compared to $6m last year, and $6.4m last quarter. R&D expenses for the quarter were $1.82m, up 4% versus last year, and down 4% versus last quarter. Sales & market expenses for the quarter were $3.1m, down 8% versus last year, and down 11% versus last quarter. G&A expenses in the quarter were $.99m down 8% versus last year and flat with the previous quarter.

 

Cost Cutting Program Indicates Shift in Strategy

Based on these lower q/q OpEX numbers, it looks as though Chyron implemented a cost-cutting program during the quarter.

If this is the case, it is a reversal of the strategy Wellesley-Wesley put in place last year when the company began ramping  up its expenses in anticipation of increased revenue from both new products and cyclical spending from broadcasters gearing up for the 2012 Olympics and presidential elections.

For example, in November 2011, company CEO Michael Wellesley-Wesley confidently stated that Chyron had made some “strategic hires for key sales positions, [and] going forward we anticipate further improvements in 2012, especially in the domestic market owing to factors associated with the 2012 Olympics and the upcoming Presidential election. Internationally, we are looking for an increased contribution from our EMEA and Latin America operations as a result of the increased headcount in the sales department that have been put in place this year.”

In anticipation  of a strong 2012 Chyron increased its spending across the board, and by the first quarter of 2012 the company’s operating expenses had jumped 20% versus the previous year, including 31% y/y increase in sales and marketing costs, and a 19% y/y increase in R&D spending.

On a year-to-date basis, the company’s operating expenses are 6% higher than during the first nine months of 2011, despite revenue being 3% lower. For the first nine months of 2012, the company’s R&D expenses are up 13%, and its sales and marketing costs are up 12% respectively versus the previous year. There has been a YTD 16% decline in G&A, however this is primarily due to the lower legal costs as described in the company’s conference call last quarter.

However now three quarters of 2012 are behind us, it appears that the anticipated revenue increases have not materialized, causing Wellesley-Wesley to shift strategies.  On the company’s earnings call he told investors “I can assure you that we’ve taken and will continue to take the appropriate steps to align our operating expenses with the current business climate.” He also said product investment be scaled back, and that the company would also have staff layoffs.

Wellesley-Wesley told analysts “about 60% of our costs are related directly to people and so it’s difficult to make meaningful reductions in expense — operating expenses — without addressing that fact.”  Chyron parted ways with its CMO immediately after the IBC tradeshow in September, and is clearly taking other measures to contain cost, including additional layoffs.

When describing the projected impact of the cost reduction exercise, Wellesley-Wesley told analysts “the steps we’ve taken will certainly reduce OpEx by 5% or more going forward and you will begin to see the real impact of that take effect in Q1 next year.

Wellesley-Wesley summed up the quarter in company’s press release saying, “Our third quarter revenues of $7.25m were 3% below the comparable period in 2011. This continues the pattern of nearly flat year over year comparisons we experienced in the first half. As is the case for other companies in our industry we have experienced a slowdown in our product revenue stream as a result of delays in spending as broadcasters emphasize cost control and reschedule their capital expenditures. This decline was experienced in North America and more markedly in Europe where the economy has stalled. This was offset somewhat by improvements in our Asian and Latin American markets. Our services revenues grew 13% year over year with the result that services accounted for 33% of total revenues in the third quarter. We have taken steps to align our operating expenses with the current business climate.”

 

 

Year-to-Date Results

For the first nine months of 2012, Chyron’s revenue was $22.81m, down 3% versus the same period last year.

The net loss for the first nine months was $2.28m, or -$0.13 per share, compared to a net loss of $3.85m, or -$0.23 per share, last year.  The operating loss for the first nine months of 2012 was $3.18m, compared to an operating loss of $1.51m for the first nine months of 2011.

 

 

Low Share Price Could Lead to Potential Delisting

Chyron’s shares fell 12%, to $0.65 the day after its Q3 2012 results were released.  The company’s stock price has been below $1 since October 1, 2012, and is currently at the lowest level in the company’s history according to this chart.

On the earnings call the company was asked whether the low share price may lead to its delisting from public markets.  Wellesley-Wesley acknowledged that one NASDAQ’s listing requirements “is that the bid price shouldn’t drop below $1 for more than 30 days and we’re now at around that point. The next step would be to receive some notification from NASDAQ that that is the case and that is of concern to them. And then there is a long process of discussion with NASDAQ, who I don’t think are keen to delist any companies and there are certainly many strategies and ways that we could avoid that happening and it is a three to six months process and so nothing is going to happen quickly.”

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Related Content:

 

Press Release: Chyron Reports Financial Results for the Third Quarter and First Nine Months of 2012

Previous Quarter: Chyron Revenue Declines 18 Percent in Q2 2012

Previous Year: Chyron Posts Net Loss in Q3 2011 Despite Growing Revenue Nine Percent

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KIT Digital To Cut 300 Jobs in Effort to Right Size Operations

Broadcast technology vendor financials | Posted by Joe Zaller
Sep 18 2012

KIT Digital has implemented a “significant workforce reduction,” which will result in job losses for approximately 300 employees, or 22% of its current headcount, by the time it is completed.

KIT says these actions will save it approximately $40m on an annualized basis, enabling it to “right size its operation and streamline general corporate functions” while maintaining a high standard of customer service.

The majority of the expense reductions will arise from “non-core areas and general and administrative redundancies.”

This announcement is one of the first public moves by KIT Digital activist investor turned interim CEO Peter Heliand, who took control of the company at the beginning of September, leading to the departure of former CEO Barak Bar-Cohen. Heiland, who was also an activist shareholder in Miranda Technology prior to its sale to Belden, owns approximately 8% of the outstanding shares of KIT digital, primarily through JEC Capital Partners, where he is Managing Director.

“By accelerating the integration of the company, we will be able to enhance our product offerings, improve time-to-market efficiency, and bring the business to a place of financial strength,” said Heiland. “While we have completed some non-core divestures and reduced the non essential support infrastructure, we are preserving all of the strategic initiatives surrounding our core competencies as we believe they will drive significant growth.”

The company said the restructuring plan will take place primarily during the third quarter of 2012 and will be completed by the end of calendar year 2012. The company currently estimates that it will record a restructuring expense in the third quarter of 2012 of approximately $4m consisting primarily of one-time termination benefits of which the majority will be paid prior to the end of calendar year 2012.

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Related Content:

Press Release: KIT digital Restructuring Aligns Expenses With Operations

Former KIT Digital CEO Bar-Cohen Resigns After Activist Investor Takes Control

KIT Digital SEC Filing: Heiland Takes Over CEO Role from Barak Bar-Cohen

KIT Digital Posts $102.6 Million GAAP Loss in Q2 2012, Sells Sezmi and Content Solutions Businesses at Steep Loss

Activist Investors Claim Board Seats at KIT Digital, Will Refrain From Adverse Actions Against KIT Digital’s Board

Text of Standstill Agreement Between KIT Digital, JEC Capital Partners, and Costa Brava

KIT Digital Exploring Strategic Options for Company Sale, Fails to Reach Agreement with JEC Capital

KIT Digital Chairman Resigns, Cites Differences With Board of Directors Over Strategic Sales Process

Streaming Media.Com Article: What’s Going on with KIT Digital?

Management and Board Shake Up at KIT Digital Sends Stock Down 22.3 Percent

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Envivio Reports Lower Q2 2013 Results, Takes Actions to Reduce Operating Costs

Broadcast technology vendor financials, Quarterly Results | Posted by Joe Zaller
Sep 07 2012

Video encoding and transcoding specialist Envivio, which went public on the NASDAQ exchange in April 2012, reported that revenue for its second quarter as a public company was $10.8m, down 6% versus the same period a year ago, and down 19% versus the previous quarter.

The GAAP net loss for the quarter was $4.3m, or $0.16 per share, compared to net income of $55,000, or $0.00 per share, during the same period a year ago, and a GAAP net loss of $2.2m, or $0.17 per share last quarter.

The Non-GAAP net loss for the quarter was $3.5m or $0.13 per share, compared to net income of $425,000 or $0.03 per share last year and a loss of $1.5m, or $0.12 per share last quarter.

Gross margins for the quarter were 62%, versus 64% last year, and 61.7% last quarter.

The results are in-line with the profit warning Envivio issued last month.  At that time the company said its revenue for the second quarter of 2012 would be in the range of $10m to $11m (35% to 41% lower than the bottom end of its previously issued guidance), non-GAAP net income / loss in the range of a loss of $460,000 to a profit of $720,000, and non-GAAP gross margins for the quarter to be in the range of 62% to 64%.

Company CEO Julien Signès attributed the company’s performance in the quarter to project delays by our service provider customers and the impact of the macroeconomic environment. “We are disappointed in our quarterly performance and have taken actions to reduce our cost structure.”

As part of this cost containment exercise, Envivio said it has begun cutting its operating expenses, and laid off nine employees in August 2012.  The company will take a one-time charge of approximately $275,000 in the third quarter of fiscal 2013 for severance and other related benefits related to the cost-cutting program.

The company ended the quarter with cash, cash equivalents and short-term investments of $63.2m.

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Outlook

Envivio says that it expects it revenue for its third quarter to be in the range of $10m to $11m, with a n on-GAAP loss per share in the range of ($0.16) to ($0.12), non-GAAP operating loss in the range of $4.1m to $3.2m, and non-GAAP gross margins in the range of 59 to 62 percent.

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Related Content:

Press Release: Envivio Reports Second Quarter Fiscal 2013 Financial Results

Envivio Warns that its Q2 FY2013 Revenue Will be Significantly Below Previously Issued Guidance

Previous Quarter: Envivio Beats Expectations in First Quarter as Public Company as Revenue Jumps 35 Percent

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© Devoncroft Partners. All Rights Reserved.

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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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Avid Posts $8 Million Net Loss for Q3 2011, Announces 10 Percent Workforce Reduction

Broadcast technology vendor financials | Posted by Joe Zaller
Oct 28 2011

Avid announced that its revenue for the third quarter of 2011 was $165m, flat versus the same period a year ago, and up 2% compared to the previous quarter. The revenue number came in slightly below the $165.3m that was expected by equity analysts.

The company posted a GAAP net loss of $8m for the quarter versus a GAAP net loss of $10m during the same period a year ago, and a GAAP net loss of $12.9m last quarter.

On a non-GAAP basis, the company posted a net profit of $385,000 for the quarter, compared to a non-GAAP net income of $1.6m last year
and a non-GAAP net loss of $3.9m last quarter.

As with the previous quarter, the company attributed its performance to softness in the European market, saying that the macro-economic situation in the region remains very fragile.  Avid chairman and CEO Gary Greenfield said that European broadcast customers clearly want to make changes, and the company is making strong progress in the region.  However these customers are still holding back from placing orders.  Nevertheless, despite the lower year-over-year revenue from EMEA, orders in region actually increased during the quarter.

Commenting on other regions, Greenfield said Avid had a strong quarter in the Americas and Asia-Pac regions.  The company also reported an increase in services revenue.

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Company restructuring announced – including 10% staff reduction

On the company’s earnings conference call with equity analyst, Greenfield outlined restructuring actions that the company says it is taking to re-align its cost structure and to accelerate its objective of expanding the company’s operating margins.

These actions were also announced as part of a form 8-K filing with the Securities and Exchange Commission.

As part of this restructuring, Avid is planning to reduce its headcount by approximately 10%, with the majority of the reduction expected immediately.  The company said will also close a facility in Irwindale, CA.

At the end of the third quarter, Avid had 1944 employees and 505 contractors, so the planned layoffs will impact approximately 200 staff.

“We believe that Avid should be able to achieve non-GAAP operating margins in the mid teens,” said Greenfield.  “While this profit level will require revenue growth, we continue to take actions to streamline and improve our operations while increasing our investments in areas of the business with higher growth potential.”

“These actions allow us to continue to invest in our core business as well as shift some resources to areas of the business that we believe offer better revenue growth for the company.”

Greenfield says the anticipated cost of this restructuring is approximately $10m-$11m, and will result in an annualized cost savings of approximately $25m-$30m.

On the company’s earnings call, Greenfield said the cuts were made across the board, with the exception of sales and marketing where the company continues to invest.

This is the second set of major layoffs at Avid in the past year. 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.”

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Highlights for the third quarter:

  • Video revenue in the quarter was $98.4m, a decrease of2% versus the same period a year ago, and an increase of 2% versus the previous quarter.  Video revenue accounted for 60% of the total revenue during the quarter, versus 60% last quarter.

 

  • Audio revenue in the quarter was $66.5, up 3% versus the same period a year ago, and up 2% versus the previous quarter.

 

  • Revenue from products was $131.9m, a decrease of 2% versus the same period a year ago, and up 2% versus the previous quarter.  Product revenue accounted for 80% of the total revenue during the quarter, the same as last quarter.

 

  • Service revenue in the quarter was $33.1m, an increase of 7% versus last year, and an increase of 3% versus the previous quarter.

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Year-to-date performance:

For the first nine months of 2011, Avid’s revenue was $492.6m, an increase of 2% versus the same period in 2010.  The GAAP net loss for
the first nine months of 2011 was $20.6m, compared to a GAAP net loss of $31.4m for the same period in 2010.  On a non-GAAP basis, the company’s net loss for the first nine months of 2011 was $4.4m, compared to a non-GAAP net loss of $5m for the first half of 2010.

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Full year guidance lowered

Due to what Avid CFO Ken Sexton called a challenging macro environment remains the company lowered its financial guidance.  Sexton said the company is expecting full year revenue to be in the range of $665m-$675m with a non-GAAP operating profit margin of 1.5% – 3% of revenue.  Sexton also said that the company expects to achieve a year-on-year improvement in non-GAAP gross margins.

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“The third quarter results showed sequential improvement in revenue and profit,” said Greenfield. “We continue our sharp focus on providing our customers with the products and solutions that help them succeed. In addition, we have taken actions which should accelerate improvement in our financial performance.”

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Related Content:

Press Release: Avid Announces Results for Third Quarter 2011

Avid 8K Filing Detailing Plans for Restructuring

Previous Qtr: Avid Announces Disappointing Q2 2011 Results

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

Previous Year: Avid Losses Narrow as Company Posts “Strongest Financial Quarter Since 2007”

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

Broadcast technology vendor financials | Posted by Joe Zaller
Oct 27 2011

Avid announced today that it has undertaken restructuring activities that include company-wide staff reductions of approximately 10%.  The company anticipates that it will complete the restructuring during the first half of 2012. Avid says it will also close a facility in Irwindale, CA

As part of this action, Avid will take a charge of approximately $10-11m for the layoffs, most of which will be realized in the quarter ending December 31, 2011.

On a conference call with equity analysts, Avid CEO Gary Greenfield said the cuts were made across the board, with the exception of  sales and marketing where the company continues to invest.

This is the second set of major layoffs at Avid in the past year.  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.”

 

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Related Content:

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

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