Avid Technology, the Burlington, MA-based maker of video and audio editing software, is trying to dig itself out of a pretty big hole. And right now, there are more questions than answers.
Avid’s stock (NASDAQ: [[ticker:AVID]]) has fallen steeply since late February, when the company announced that it wouldn’t be able to make the quarterly earnings report that was scheduled for the next day.
In a brief statement, Avid said it needed more time to “evaluate its current and historical accounting treatment related to bug fixes, upgrades and enhancements to certain products.” Avid also said it couldn’t estimate when that work would be done.
In an update late last week, Avid gave a little more detail about its accounting problems: the company says its investigation is mostly focused on whether some updates to its software should have been recorded as “post-contract customer support” under generally accepted accounting principles.
Avid gave no idea of when it might be ready to file its quarterly earnings, but said the accounting investigation wouldn’t get in the way of its product or growth strategies. Avid also noted that it “has no debt and ample cash to support it in these efforts and believes it is well positioned to support its customers’ ongoing success.”
In the meantime, NASDAQ is beginning its process for possibly delisting Avid, since the company is no longer complying with earnings reporting rules. That process could take some time, and Avid says it intends to submit a plan for getting back into compliance by the May 20 deadline.
And the sharks are circling, too—several law firms have published public notices that they are looking into Avid’s practices, dangling for possible shareholder lawsuits.
The prelude to all of this trouble was the resignation in mid-February of CEO Gary Greenfield, who had led Avid since 2007, to be replaced by board member Louis Hernandez.
Avid noted that Greenfield would stay on the company’s board, an indication that he probably wasn’t being drummed out of the company. And it said he would collect his $1 million salary, along with a $1.1 million bonus. That’s despite the fact that Avid’s stock fell from highs of around $30 to less than $8 during his tenure, as companies like Apple have encroached on Avid’s video-editing franchise.
