Avid's presence at NAB was indeed impressive, with the second-largest booth next to SONY's. Their broad line of products continues to appeal to professionals in our industry as market-leading solutions for digital video and audio. However, I saw nothing dramatically new or different this year, other than at the very high end of the spectrum, i.e. the camcutter disk-based video camera, the ENG news/broadcast systems and FX post production workstations. There are good markets here, but they are niche-oriented and limited IMHO.
Let's look at what the analysts are projecting. Earnings consensus for the current quarter is a loss between -0.08 (Zacks) and -0.09 (First Call). In the past 90 days, earnings have been trending down from -0.05 at First Call. Earnings estimated for FY97 are at $0.25 and FY98 at $0.80. At a stock price of $14.25, that's a PE of 50.9 for this year. AVID is ranked 252 out of 321 companies in the computer/software industry. Median growth rate for the next 5 years is estimated at 20%. Outstanding shares are 21.28M, with a float of 9.4M; current month's short interest is .45M shares, up from .41M shares last month.
So why has the stock rocketed back up from $9? My guess is the Intel announcement, combined with other positive press releases and a good showing at NAB. Or, there could be a whisper number out about a dramatic increase in revenue/share. Sure, AVID might pull a profit off this quarter, but I seriously doubt it will be outstanding. Remember, NAB orders from April won't kick in untill next quarter. You'd have to go back 6 quarters (3Q95), to see a profit of $0.43/share on revenues of $114 million. Can the analysts be that far off? We'll find out the week of April 28, when the next earnings report is released.
I don't short stocks as a rule; I'd rather sell on bad news and find a winner somewhere else. AVID has surprised me with its short-term rise, and since I'm not privvy to any rumors or whisper numbers, I would definitely sell if I were still a shareholder. AVID is still banking on a niche market which is seeing an explosion of competition, and concentrating at the very high-end, which is limited.
I think the real exciting announcement at NAB was Apple's upcoming QuickTime 3.0, which will be released simultaneously for both the Mac and Wintel platforms (a company first). QuickTime is a universal file format that every hardware manufacturer and software developer can use, with capabilities unmatched by any other solutions on the market. Dozens and dozens of software developers use QuickTime in their products. QuickTime is making it easier to perform the kinds of high-end functions AVID's systems can with a suite of less-expensive specialty software operating with generic, inexpensive video cards. QuickTime 3.0 is scalable from software-only quality all the way up to film-quality resolutions, depending on the hardware acceleration you throw at it. Most impressive at the demo I attended were the real-time effects (simple dissolve, wipe) done in software on a fast PowerMac.
D. Kuspa |
