AVID Shares Plunge On Weak Forecast

(From The Associated Press)

AVID TECHNOLOGY INC. shares sank nearly 25 PERCENT in Thursday trading after the company warned that its second-quarter results will be lower than previously estimated from weakness in its broadcast segment.

Late Wednesday, the TEWKSBURY, MASSACHUSETTS-BASED maker of media-editing software forecast quarterly revenue of $160 million, down some 21 percent from the first quarter because it booked less revenue than expected for its broadcast products, as well as from the unfavorable impact of a weak dollar.

"Uncertainty surrounding the timing of customer installation and acceptance of large deals is an inherent risk factor in our broadcast business," President and Chief Executive DAVID KRALL said in a statement. "Even though our broadcast revenues were down sequentially, our broadcast bookings were actually up over 10 percent."

For the quarter ended June 30th, earnings are projected to be $12 million to $13 million, or 34 cents to 36 cents per share. Before acquisition-related charges and a tax break, adjusted income should be $14.5 million to $15.5 million, or 40 cents to 42 cents per share, the company said.

Still, AVID's outlook is well below the average target of 58 cents per share on $171.4 million in sales from analysts polled by THOMSON FINANCIAL. The year before, AVID posted earnings of 47 cents per share and had sales of $139.9 million.

But while the company is expecting its revenue to grow sequentially in the third quarter, it forecast another revenue shortfall from the dollar's continued weakness and DELAYS in shipping its AVID SYMPHONY NITRIS video-editing software.

A. SASA ZOROVIC, an analyst with OPPENHEIMER AND COMPANY, cut the stock to "NEUTRAL" from "BUY," saying the revised forecast "SIGNIFICANTLY" raises the level of uncertainty at AVID, which has seen a steep decline in broadcasting.

Zorovic added that AVID's expectations to recognize more broadcast revenue in the current period "would then imply sharply higher third-quarter revenue and earnings-per-share estimates than we originally assumed -- and not lower, as now guided by management."

Earlier in the day, AVID's stock plunged to $39.80 -- its lowest price in 18 months -- down from a 52-week high of $68.35 set in March. AVID shares closed down $14.70, or 26.5 percent, to $40.60 on THE NASDAQ, on more than 26 times the normal volume.

Meanwhile, AVID's lackluster guidance also expanded analyst and investor concerns about the company's planned $462 million acquisition of video editing company PINNACLE SYSTEMS INC., which is scheduled to be completed next month.

"The management faces a significant challenge in integrating PINNACLE at the same time its core business is experiencing a sharp slowdown -- and not just a 'revenue pushout,' in our view," Zorovic wrote in a research note.

PINNACLE shares dropped $1.18, or 20.6 percent, to close at $4.53, with more than 12 times the average number of shares changing hands in NASDAQ trading.

Analysts currently predict AVID's third-quarter profit at 67 cents per share on revenue of $193.3 million. A year ago, AVID earned 58 cents per share and had $147.4 million in revenue.

Jeremy Anderson, thanks for the post.