Avid selling two divisions, will trim workforce by 350
Consumer line fell short for audio-video firm
Avid Technology Inc., a Burlington company that makes equipment for recording music and video, said Monday that it will shed 350 jobs, or 20 percent of its workforce, as it abandons consumer product lines that have performed poorly in recent years.
Avid’s digital editing software suites have become the tools of choice for Hollywood productions, but its efforts to provide similar tools for consumers making videos and audio recordings have proved disappointing, company executives said in a conference call with reporters and analysts. As a result, Avid will sell two consumer products divisions, both based in California, to companies in Rhode Island and Canada.
An undisclosed number of workers would keep their jobs with the new owners, but the rest would be laid off, Avid said. In addition, the company’s chief operating officer, Kirk E. Arnold, and principal accounting officer, Jason G. Burke, are leaving the company.
The company’s worldwide employment will fall to about 1,400 from about 1,750, the company said.
Avid would not say whether the sale of the consumer divisions would affect employment in its Burlington headquarters, where about 600 people work.
In a conference call, Avid’s chief executive, Gary Greenfield, said the sale of the consumer divisions will “allow Avid to focus on areas where we can lead.”
Avid, founded in 1987, pioneered a way to copy videotape to digital hard disks, allowing editors to quickly get to any frame without having to fast-forward and rewind footage. This changed the way videos and films were edited.
In 1995, Avid purchased DigiDesign, which created the ProTools software for editing sound.
These audio and video product lines became dominant in the professional market, which includes broadcast television stations, movie studios, and video and audio “post-production houses,” which edit television and radio advertisements.
The company’s editing tools were used on seven of the nine Best Picture nominees at this year’s Academy Awards, including “The Help,” “Moneyball,” and “War Horse.” For the past 11 years, every nominee for a sound-editing Oscar has used Avid tools.
Avid, however, has not had much success cracking consumer markets, which are dominated by Apple Inc.
In 2004 and 2005, Avid purchased two companies that targeted the consumer audience. First it bought Midiman Inc., which made keyboards, controllers, and digital DJ systems under the M-Audio brand, for $174.5 million.
A year later, Avid purchased Pinnacle Systems Inc., which makes home video editing software, for $460 million.
On Tuesday, Avid said that it would sell its consumer audio unit, now named M-Audio, to inMusic, of Cumberland, R.I., and its consumer video division to Corel Corp., in Ottawa, for a combined $17 million.
By the time Avid had acquired these companies, said Douglas I. Sheer, chief executive at DIS Consulting Corp., an entertainment media research firm in Livingston Manor, N.Y., Apple was already solidifying its lead among consumers for audio and video editing applications.
“Avid bought consumer-oriented companies in an effort to slow the impact of Apple,” Sheer said. “Unfortunately, it was too late. The horses had left the barn, leaving Avid saddled with poor-performing consumer companies.”
The consumer divisions contributed approximately $91 million, or 13 percent, of Avid’s 2011 revenue of $677 million. Avid reported revenues of $152.1 million for the three-month period that ended March 31, compared to $166.3 million for the same period in 2011.
The net loss for the first quarter was $15.6 million, compared to a net loss of $5.1 million in the first quarter of 2011.
Yesterday Avid’s stock price rose 41 cents, or 5.5 percent, to close at $7.84 on the Nasdaq market.
D.C. Denison can be reached at firstname.lastname@example.org.