Avid Has Been Delisted from the NASDAQ Stock Market. Is This the Beginning of the End?
Not exactly. Avid received a delisting letter from the NASDAQ Stock Market earlier in the week, and while it might seem like the end of the world, this was actually expected. Companies have to maintain certain conditions to stay listed on stock markets, and while Avid was granted a reprieve last September as long as they regained compliance by March, it became clear that the situation would not be resolved in time, and thus they have been delisted from the NASDAQ. So what's next?
Delisting from NASDAQ
According to the Boston Business Journal:
The Burlington, Mass.-based company is in the process of restating a number of financial statements in recent years, and has not filed a financial report with the SEC in more than a year.
In a press release Monday, Avid said the company hopes to complete restatement by mid-2014 and intends to promptly apply for relisting with the Nasdaq Stock Market soon afterwards.
The company was notified of the delisting on Feb. 21 by the Nasdaq Listing Qualifications Hearings Panel, according to the release.
The company's common shares will begin trading on the OTC Markets following the suspension of trading on Nasdaq, according to the release.
Now, being delisted is never a good sign, but the company plans on being listed again sometime in 2014, so it's not actually as dire at first glance as it may seem. That doesn't mean the company is in great shape, however. Avid was only trading slightly above $5 at the time of delisting (down from a high of $67), and they have faced consistent net losses quarter after quarter. Negative growth trends are bad for any company, no matter how big or small they are, and just like we saw with Kodak, they can't be sustained forever.
If you are a user of Avid products, nothing is likely going to change in the immediate future. Just like with Kodak, large businesses can continue operating as usual long into financial trouble, and Avid will be no different, even if things get much worse in the future. While Avid products may be the tools of choice for the highest end productions (and they do make a stable and reliable products), their market share has been affected by products from Apple and Adobe, and that trend is not likely to reverse.
Can Avid Take Back the Market?
At this point it's unclear if Avid can reverse the trend and grow again. Many don't like Final Cut X for various reasons, and there are enough people who also aren't happy about Adobe CC's subscription plans. I know Avid makes more than just Media Composer, but if they'd like to get back into the market at the lower end, redesigning the exterior to make it more appealing overall might be a good first step. Competing better on price would also go a long way towards getting average users into the Avid ecosystem.
Pro Tools may actually have the best shot at keeping Avid alive, but a lot would still need to be done with the current company. Down the road we may even see one of the larger companies buy into Avid for pennies on the dollar, but those acquisitions don't always end well for the products being acquired.
We'll just have to wait and see what Avid has up their sleeves to get back in the black. Sooner or later, they may be looking at some tough decisions just as Kodak did not too long ago.