Avid confirmed today in its quarterly earnings call that it has undergone a restructuring, laying off approximately 10% of its workforce in the process. With a headcount of 1,944 employees as of today, the move affects about 200 Avid employees. The cuts were across “all areas of the business”, excluding sales and marketing positions.
The announcement was part of an earnings report that observed a GAAP net loss of $8.0 million dollars for the third quarter on revenues of $165 million for the three-month period ended September 30, 2011.
Depending on your viewpoint, this news could either come as a big surprise, or just be what was expected next from this major manufacturer of digital media content tools.
Or it could be both.
Days After a Major New Product Announcement
Surprised? You’re not alone. The timing is highly unexpected, especially to everyone in audio. Thousands watched a live pre-AES 2011 Webcast last Thursday from New York City as Avid’s corporate brass and top developers unveiled Pro Tools 10 and the new Pro Tools|HDX DAW, describing the dawn of an entirely next-generation system.
As usual, Avid’s declaration of bigger-better-faster was matched just as quickly by user concerns over the cost and timeframe to upgrade. And also as usual, Avid had to start dealing immediately with large-scale ill will over forcing a near $10,000 upgrade cost – minimum – on its HD customers, the fact that they would have three years to manage it notwithstanding. Forums are already in flames, and Avid’s Facebook page is seething with angry comments.
A game-changing product rollout, on the eve of the industry’s biggest tradeshow, is generally not a harbinger of restructuring and job cuts. But Avid’s executives may have known the latter were imminent that Thursday night, even as they played out a well-rehearsed routine.
All this came just one year after an equally landmark 2010, when Avid’s near-annual restructuring came in the form of a major rebrand for all audio products. First, Euphonix was acquired in the spring to beef up the work surface sector of the market. Then the poisoned Digidesign name was jettisoned for good, Pro Tools 9 was released, and three new HD interfaces (HD I/O, HD Omni, and HD MADI) were introduced, along with goodies like the Dave Hill-designed HEAT mixing plugin.
Improved customer service, support and overall empathy were also meant to be a part of the program for the industry-standard DAW. In a related development, Avid also simultaneously made it known through the Digi User Conference forum yesterday that it was offering a free 14-day Pro Tools 10 and Pro Tools HD 10 trial, starting next week on the Avid Website. Additionally, any customer who currently owns Pro Tools HD 9 is eligible to purchase the Avid Standard Support Plan for $599, which will qualify them for a free upgrade to Pro Tools HD 10.
The program effectively lowers the cost of an upgrade to HD 10 by several hundred dollars. It addresses post haste some of the heavy flack that Avid caught for the weighty upgrade pricing that accompanied last week’s release of Pro Tools 10.
The Continually Shrinking Avid
For anyone who has followed Avid Technology as a company (NASDAQ: AVID), however, today’s restructuring and staff reductions are, unfortunately, a logical turn of events.
This is a corporation that laid off 120 people in 2010, and 410 employees the year before that – 15% of its staff at the time. It was all a part of five rounds of Avid layoffs that took place between 2006-2009 alone, and a reflection of the company’s overall declining financial health.
Don’t forget that Avid’s product lines also span essential video editing and finishing systems (DS, Media Composer, Symphony Nitris). The VENUE live consoles are in the mix, as are a raft of popular audio brands that the company acquired over the years, notably M-Audio, System 5, and Sibelius. Clearly, none of these lines have been making enough of a difference to stop Avid from its ongoing advance in the wrong direction.