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Re: AVID HELP (fwd)



In answer to Bil;l Tpazio's question, no I am not an Avid employee, however as
an ex Avid distributor, I have a reasonable insight into the company. The
following investment exerpt may provide further enlightenment:

Hi-Tech or Hi-Tack?

While the NASDAQ would seem to be the prime vehicle for listings among the
emerging multi-media companies determined to build the financial muscle
necessary to stake their claim on a section of  the much touted information
super- highway, a disturbing trend has emerged in recent months. Allegations of
breach of contract, questionable accounting procedures and generally sleazy
business practices have been leveled against executives of more than one of the
new listings. A lack of proper business skills and perhaps more importantly, a
failure to understand the "ethics" required to establish and build the blue chip
companies of the next decade,  have lead to growing concerns being voiced by a
number of industry observers.

A former darling of the industry, Avid Technology Inc., with Curt Rawley at the
helm, went public in March 93, at an offer price of $20, having languished in a
fairly narrow trading range for the better part of a year, the stock seesawed
dramatically in recent months.  

CEO Rawley bears no resemblance to the slender bespectacled nerd we have come to
expect at the helm of the new bread of  technology companies, grossly overweight
and endowed with the social skills of the farmyard, Rawly's photograph
(carefully side lit to reduce the massive girth) can be seen leering from the
top of the irregular and inconsistent Avid news letter.

In recent months disturbing reports have emerged in both Asia and Europe of
products being shipped to distributors without orders to fulfill. "Acceptable"
accounting practices appear to permit the company to record a sale the moment
the boxes are moved off the loading dock. This form of pyramid selling has lead
to distributors receiving units as much as six months ahead of the required
delivery date, with no possibility of collecting accounts until some time after
the required delivery.

Further allegations of breach of exclusive distribution agreements in various
territories have emerged. Because many of the distributors concerned are
relatively small companies, they are reluctant to take on a high profile US
manufacturer in a breach of contract action in Boston ( distributor contracts
stipulate that any dispute under the contract be brought before the courts of
Boston Massachusetts). This clear and disturbing trend of blatant disregard for
contractual obligations coupled, with questionable sales and marketing practices
is leading many in the industry to question not only the ambitious bur
unsupported claims Avid make for technical capabilities of the products, but
also the motive and business ethics of the people behind the business.

Avid's Asia Pacific office is headed by the fresh faced former door to door
encyclopedia salesman, N. Louis Shipley, a man who's cherubic complexion belies
the his single minded determination to achieve the monthly sales quota at any
price. The mounting accusations of deplorable business practices have come from
customers dismayed by Shipley's clumsy dismantling of  the Asian distributor
network in favor of  a team of technically  incompetent Avid salesmen. While
enthusiastic, these salesmen have demonstrated a woeful lack of knowledge and
understanding of even the most fundamental requirements of both broadcast and
post production companies.

The lack of understanding of fundamental technological issues in the broadcast
industry perhaps goes some way to explaining the somewhat bizarre direction
emanating from corporate headquarters in Tewksbury Massachusetts. A glance at
the 94 annual report for Avid reveals a disproportionate level of expenditure on
marketing and the questionable role of investor relations,  while R & D, a
fundamental requirement for sustained growth in any new technology company,
languishes at the bottom of the priorities.
 
The October 94 issue of Asia Pacific Broadcasting magazine ran feature articles
under the banner " Cutting Edit Costs" heavily biased toward the Avid products.
Under the heading " Hard News on Hard Drive" Mike Feazel  chose to list Channel
5 in the Philippines as one of the "more than 3500 worldwide users of Media
Composer".  

Channel 5 in fact took delivery on approval of an Avid Newscutter system (not a
Media Composer as claimed) in June of 94. after many technical problems
complicated by the lack of technical and training support resulting from an
ongoing breach of contract dispute between Avid and their local distributor,
Channel 5 finally elected to return the system to Avid, choosing instead to
install the less hyped and significantly lower priced Prime Time system from
newly acquired Dynatech company, EMC2.  reliable operation coupled with strong
local technical and operational support were given as significant factors in the
decision to opt for the rival EMC2 system.

The announcement in August 94 of Avid's purchase of the news division of  Basys
Automation Systems from DEC, certainly got the industry's attention, but what
was initially perceived as  a realignment that would provide significant
benefits is now viewed with more skepticism. Industry analysts are examining
what appear to be  Avid's questionable intentions. In trying to force there own
particular brand of low quality JPEG picture compression and still unproven ATM
networking, Avid have succeeded in highlighting many of the inherent
technological weaknesses in both their software,  and of equal concern, the
third party hardware heart of the systems, the somewhat outdated Macintosh
Quadra 950. Avid have remained staunchly loyal to the Quadra 950 while
competitors such as ImMIX have provided customers with significant advantages by
porting software to the  more powerful RISC based Power PC.

While filled with traps for the unwary, the new technology listings will
continue to form perhaps the most promising sector of the NASDAQ, clearly with
careful timing, the astute investor can reap significant rewards even from
companies who are only in for the short term.