Monday, July 02, 2012

Avid Sells Consumer A/V for $17 Million and Cuts 365 Jobs

 

Avid sold off its Pinacle line of products today for a paltry $17M after having paid $462M for the company back in 2005. They also cut loose 365 employees or about 15% of their workforce. Some of those employees will move with the Pinnacle products and the others are on the street. 

“It’s never easy to make these changes, but we believe it will make Avid a stronger...  more agile company,” Greenfield said. “As a small company, we’ve had to make some hard decisions.”

So Avid is trying to hang on to the more profitable pro / broadcast products while cutting loose their consumer products. They are raising some cash which will get written down aginst other losses for near break even. Cutting their workforce also helps their bottom line  but overall its stil not encouraging news. More Info HERE with more details.

One has to question why selling a division that generates $91M in revenues for $17M is a smart move... my guess is that $17M represents about the same profit that division would of made for the year except they have in as cash in hand. This gives them about $67M in the bank which could keep them limping along for a while. They have chosen to now just be professional products and we'll see how that plays out. In the end, I would not be surprised to see them also sell off their NLE product. Their real income and profit is in shared storage and the software and support it requires. Time will tell, and it will probably be sooner rather than later.