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Why doesn't Apple buy AVID?

post #1 of 5
Thread Starter 
$264M market cap.

?
Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
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Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
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post #2 of 5

I’d guess it would be a … two words. two words. The thing that you can’t have a monopoly. Two words. Something… something. Short words, too. Cause? There’s an ’s’ in it somewhere. Class… trust… no… 

 

I have Alzheimer’s. That’s all there is to it. I lose nouns left and right.

 

It’s that thing–the monopoly thing. Someone would whine that Apple, by having Final Cut Studio, would become a monopoly by buying Avid.

Originally posted by Marvin

Even if [the 5.5” iPhone] exists, it doesn’t deserve to.
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Originally posted by Marvin

Even if [the 5.5” iPhone] exists, it doesn’t deserve to.
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post #3 of 5
Quote:
Originally Posted by Tallest Skil View Post

I’d guess it would be a … two words. two words. The thing that you can’t have a monopoly. Two words. Something… something. Short words, too. Cause? There’s an ’s’ in it somewhere. Class… trust… no…

It’s that thing–the monopoly thing. Someone would whine that Apple, by having Final Cut Studio, would become a monopoly by buying Avid.

Antitrust law?

http://en.wikipedia.org/wiki/United_States_antitrust_law
http://en.wikipedia.org/wiki/Competition_law

I see AVID has been delisted from public stock trading:

http://www.forbes.com/sites/bobbyowsinski/2014/02/27/major-changes-around-the-corner-for-music-as-avid-delists/

Their financials weren't too good the last time they posted them Q3 2012 and they had to completely redo their accounting because they hadn't factored in costs for bug fixes and upgrades and failed to do this in time. Their current market cap isn't accurate as current trading is based on very old financial data.

One interesting piece of info that they released was about their audio systems. The audio guys were complaining about PCIe for their HDX cards in the Mac Pro. It turns out that AVID has only sold 11,000 HDX systems worldwide in total:

http://www.marketwatch.com/story/avid-sets-new-standard-for-audio-production-with-growth-and-expansion-of-pro-tools-11-2014-03-12

Apple likely sells over 50k Mac Pros every quarter and it would seem a good bit more for the new one at least for the time being. Even at 1% of the Mac userbase, that's about 700,000 machines of which 11,000 is very small.

AVID is a relatively small company with under 3,000 employees and their last reported revenues were down to $127m per quarter with consecutive net losses (at the time they had $350m equity but they recorded $238m of goodwill, which isn't an actual asset, their tangible assets minus liabilities were just over $100m and losing $17m per quarter). Although they are a very important part of high-end movie and audio production (you can see the AVID logo at the end of a lot of films), they would have run out of cash eventually because upgrades are needed less and less as a software base reaches maturity. That's why they should have gone the subscription route like Adobe (it also has the added bonus of sorting out their accounting going forward). Not all customers like it but companies like AVID and Adobe that survive on software need this recurring revenue to survive over the long term and the movie and audio industry would have paid it.

Some customers think that resisting against this kind of payment scheme is the best thing but this is the alternative. The software prices go up, the unit volumes go down and eventually, they disappear altogether. That's not a win from the buyer's point of view because although people can keep using the software for a few years, bigger companies simply won't rely on it and the industry will shift to something else that the buyer will have to learn all over again.

Apple buying AVID wouldn't be anti-competitive because Adobe competes against them as well as Sony and Lightworks but it wouldn't do Apple much good. I suppose they could get the audio and video engineers but say for example they decided to make dedicated Thunderbolt HDX hardware, 11,000 units worldwide is just not a big market for them, nor are $127m software revenues. They already have a team working on FCPX and Logic Pro.

I very much doubt that Apple would continue to sell AVID products. Adobe might but again, they have teams on their own products. I suspect AVID will go bankrupt because if they've sustained $10-20m net losses for 6 quarters and they had $100m tangible assets, they could have negative shareholder equity at this point (the goodwill would still offset it officially). Adobe would be better off buying them up to get some leverage in the film and audio industry. They could use Pro Tools instead of Sound Booth or likely merge them. I think they'd stick with Premiere though. Hardware Thunderbolt HDX would still be low unit sales but they've ventured into hardware.

If they go into bankruptcy, I reckon the staff will leave and take up jobs at other companies and they'd struggle to find a buyer but you never know, some movie studios might come together and buy the assets for under $100m in order to open source the software suite so they had a permanent software suite they could rely on.
post #4 of 5
Originally Posted by Marvin View Post
Antitrust law?


That’d be it. Anti-trust. 

 
Apple buying AVID wouldn’t be anti-competitive because Adobe competes against them as well as Sony and Lightworks…

 

I thought about Adobe, but then I remembered After Effects is just effects–like Motion. They don’t have a proper video suite. Sony, however, I’d forgotten completely. Vegas Pro is really a professional-grade thing? :lol: 

Originally posted by Marvin

Even if [the 5.5” iPhone] exists, it doesn’t deserve to.
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Originally posted by Marvin

Even if [the 5.5” iPhone] exists, it doesn’t deserve to.
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post #5 of 5
Quote:
Originally Posted by Tallest Skil View Post

I thought about Adobe, but then I remembered After Effects is just effects–like Motion. They don’t have a proper video suite.

Premiere Pro:

http://nofilmschool.com/2013/05/coen-brothers-final-cut-pro-adobe-premiere/
http://www.studiodaily.com/2012/03/why-switch-to-adobe-premiere-pro-ask-the-oscar-winners/

But that's why they wouldn't need AVID's video tools. On the audio side, I don't think Soundbooth is quite on the level of Pro Tools.
Quote:
Originally Posted by Tallest Skil View Post

Sony, however, I’d forgotten completely. Vegas Pro is really a professional-grade thing?

Sony is quite heavily involved in film. They of course have Sony Imageworks and even have their own visual effects rendering engine:

https://www.solidangle.com

and they build very high-end camera hardware:

http://pro.sony.com/bbsc/ssr/show-highend/

Vegas Pro however seems aimed at consumer-level:

http://www.sonycreativesoftware.com/showcase/default.asp

so in a way it might not count as competition but legally it would probably hold up. As long as people have an alternative to do the job then that would count as a competing product.

There's not much choice, if AVID goes bankrupt then their competing offering disappears anyway.
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