Thanks Mark for confirmation of my call last year on Avid. I got nailed over on Motley fool by a poster who questioned my motives for "always being negative on Avid". He obviously didn't know that I have been bullish on Avid in the past when it was a good investment. Well, I am still negative. Did you read my post re the Intel announcement? If not, go to techstocks.com
I believe this is a short-term pop that won't last, especially if Avid comes up with disappointing numbers AGAIN in a couple of weeks. However, if they can announce even a few pennies of profit, it will be a great relief to shareholders and might prop the price up for a while. But earnings drive stock values and PEs, and it's unlikely that Avid will regain its sales and earnings momentum overnight, so be cautious until we see evidence that Avid can make any money at all. Even if Avid does manage to earn .80 this year, that would yield a PE of about 16 with the current share price of $12 1/2, which IMHO isn't really undervalued for a company with Avid's previous year of losses and relatively flat sales momentum. To justify a much higher PE, Avid would have to demonstrate a much higher sales and revenue growth than it has in the past year.
The National Association of Broadcasters convention runs next week, and I'll be able to get a better handle on Avid and its competitors after that. News is out that Avid is reducing its price on its entry-level nonlinear system (MCXpress for Macintosh) from $14,995 to $9,995 and this addresses one of my concerns over Avid's marketing plan. We'll see if it helps them earn a PROFIT.
D. Kuspa |
