Avid Faces Key Growth Crisis

Avid Technology, Inc. (NASDAQ: AVID) makes its money selling graphics systems to the media. The ongoing issues surrounding the media are still spilling over and limiting growth here. Avid is lowering its guidance.

The company now expects that its revenues will be in a range of $125 to $127 million, versus $164.7 million a year ago. The revenue for the ongoing business for the third quarter of 2012 was $121 to $123 million, down 14% to 15% compared to ongoing revenue for the third quarter of 2011 of $143 million. Third-quarter revenues include $4 million related to the July 2012 divestitures of its video and audio consumer-focused businesses. Its GAAP loss will be in a range of $17 million to $19 million for the quarter, down from -$7.6 million a year ago. The estimated non-GAAP net loss for the third quarter of 2012 is expected to be $3 million to $5 million.

What Avid sees as the cause is due to "sales execution in the Americas region and some transitional issues related to the implementation of the strategic actions," which the company announced back in July.

Avid's real problem is that there is a lack of growth as far opportunities are concerned. Unless it can somehow monetize off of the new media trends, there will be very few growth opportunities for the company.

JON C. OGG