Avid Switches CEO’s: Will Louis Hernandez Turn It Around?
For a minute, it looked like Avid had dropped the drama.
Will the change in leadership mean a chance in direction?
Everyone who visited their booth at NAMM a couple of weeks ago saw reassuring signs, as a wave of Avid-shirted workers manned all four sides of their mega-booth. The big news announcements felt comforting too, including new homemade AAX plugins, a talent search competition with Abbey Road Studios, and an official Sibelius training program. Avid felt like an audio solutions company creating hardware, software and even opportunities for its users.
But as it turns out, it was actually just a smooth section of track for Avid’s ongoing corporate roller coaster. That bouncy trip just took another turn today, with the unexpected announcement that Louis Hernandez would replace former President and Chief Executive Officer Gary Greenfield – effective immediately.
For anyone who cares about their DAW, on the surface this can’t seem like too bad of a thing. After all, things have not been going well under Greenfield’s leadership, especially for the people who work at Avid. The company laid off 410 employees in 2009, 120 people in 2010, 200 more in 2011, and then another 20% in 2012, or 350 employees. They also sold M-Audio off to inMusic at that time. It’s well respected consumer video editing line Pinnacle Systems was sold off to Corel then as well.
Not that all this cost-cutting has been benefiting shareholders. Greenfield’s tenure at Avid began in December, 2007, a year that its stock hit a high of $37.71, and two years removed from the company’s all-time high stock price of $66.02, recorded January 31st, 2005. Flash forward to today, and Avid shares stand at $7.87 — it’s stock rose $.17 on the Hernandez announcement, but remains closer to its 52-week low of $5.85 than it is to its high of $12.14.
Will Consistency be the Key?
A simplistic look at the stock price alone would suggest a company near the end of its life cycle, plodding acceptingly towards bankruptcy. But perhaps there’s hope with today’s announcement.
Could Hernandez’ appointment, made by the company’s Board of Directors, spur a turnaround at Avid, manufacturer of the industry standard DAW (by a landslide) and the crucial core of many, many music studios, film and TV audio post suites, and live venues? Well maybe – but seeing how Avid is steadily sinking, there may not be a whole lot Hernandez can really do.
Perhaps continuity will be on his side. For better or for worse, Greenfield will remain on Avid’s Board of Directors, and Hernandez will benefit from his status as a decently-tenured board member himself – he’s occupied a seat since 2008. Hernandez was most recently Chairman of the Board and Chief Executive Officer of Open Solutions, Inc., a technology provider to financial institutions worldwide. Open Solutions was just acquired in January, 2013 by Fiserv, Inc. — it made Hernandez available to step in as Greenfield’s replacement, and possibly served as an impetus for the CEO switch.
Louis Hernandez is the new CEO of Avid.
Upside and Risk
If a Pro Tools system is at the heart of your studio – and therefore your business – the latest major change at Avid is yet another cause for pause. Does Hernandez have the Eye of the Tiger, with ambitious plans to bring the company back? Or is this simply a changing of the guard, with no serious mandate to reverse Avid’s slide?
If it’s the former, the audio and visual media industries will soon have reason to flourish, since significant advances in audio processing, interfaces and networking will follow. But if it’s the latter, there will be reason to fear – Avid’s thinning workforce will have to be slimmed down some more, and some day there will be absolutely no one left to support all those Pro Tools HD systems when they crash.
Keep your fingers glued fast to your trackball: anything might happen next on Avid’s wild ride.
— David Weiss
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TrustMeI'mAScientist
February 11, 2013 at 5:57 pm (11 years ago)Interesting analysis. My guess is that Avid is less like a business at the end of its lifecycle and more like a textbook “cyclical.”
They make products that will last you 5-10 years, kind of like a car.
Their stock goes up when the economy is up and people are doing tons of upgrades, and it plummets hard when things sink.
Their recent financials look pretty good, and their professional market share is still huge. I don’t think they’re going anywhere anytime soon.
Their stock prices may not reach the extreme heights they once did, but within a couple years, they’ll be back up again soon, and significantly so. That’s my best guess, anyway.
Their stock prices are slower to rise compared to other cyclicals simply because people seem to upgrade studio equipment after things like cars and homes. And people have been waiting a long time to upgrade their cars and homes!
That’s my take, anyway. Their stock price was very attractive when it was down near $5. And it’s pretty attractive right now, especially if you check their balance sheet…
Derek Williams
February 12, 2013 at 4:49 pm (11 years ago)Sacking the Sibelius development team was also a significant part of the Avid PR disaster, and led directly to new moves by Yamaha Steinberg to set up a rival music scoring application using the very people Avid sacked in London, the city Avid claimed was too expensive to keep an office in. Creating a hot competitor for themselves when they already had the world’s best selling scorewriter in their software gallery, and shafting their users was an essay in bungling of the highest order. More at http://www.sibeliususers.org and http://www.savesibelius.com
The essential difference between Avid and Yamaha is that Yamaha designs and builds things, whereas Avid is run by people with the solitary motivation to make a personal pile by any legal means. As customers, we are pawns on their chessboard of strippable assets. Likewise, Avid staff are not conisdered as people, but as mere processes on a spreadsheet that can be cut and pasted nolens volens.
I wish Mr Hernandez well, hoping he can pull Avid Technology out of the mire, but he will have quite a job to convince me and the 11,300 Save Sibelius petitioners that Gary Greenfield ignored. We will be watching this space.
Attic
February 26, 2013 at 8:55 am (11 years ago)I think Avid is dead in the water. Their hardware products are full of bugs and break. They have lost so much ground that I expect they will file bankruptcy somewhere in the next 8 years. It would take a miracle for them to turn it around. I do wish them the best.