Avid Under Investigation by US Law Firms On Behalf of Avid Shareholders
Google “NASDAQ: AVID” this morning, and the news isn’t pretty.
Avid is making headlines yet again — for the wrong reasons.
On February 25, Avid announced that it was postponing its Q4 and full year earnings for 2012, with the purpose of providing “additional time for the company to evaluate its current and historical accounting treatment related to bug fixes, upgrades and enhancements to certain products which the company has provided to certain customers.”
Announcements like this are never good for a publicly traded company, and the investment community is in full agreement. Yesterday, PSNEurope – acting on a tip from the blog Pro Tools Expert — reported that the New York law firm Newman Ferrara LLP, along with Washington-based Finkelstein Thompson LLP, had both announced investigations on behalf of Avid shareholders into “potential violations of federal securities laws and breaches of fiduciary duty by Avid and certain of its officers and directors.”
Since then, the piling-on has continued. In less than 24 hours, the Pennsylvania-based law offices of Howard G. Smith, and New York-based Levi & Korsinsky have announced similar actions.
These developments come on the heels of Avid’s announcement that Gary Greenfield, who led the company from 2007-2013, would be replaced by new CEO Louis Hernandez. Hernandez officially took the reins of Avid, whose stock price and consumer confidence has been on a steady decline for years, on February 11.
[Editor’s Note: This article was updated at 4:07 PM EST, February 28, 2013, with the following statement from Avid]
Avid issued the following statement on the subject: “We recognize there are questions about the delay of our Q4 and full year 2012 earnings announcement. We want to assure our customers, employees, business partners, and investors that this delay is due to a technical accounting evaluation, as stated in our press release. We continue to invest in product innovation and execute on our growth strategy, and have significant cash and liquidity, and no debt. We are well-positioned to support our customers’ ongoing success.
“In situations where companies have announced a delay in reporting earnings results, it is not unusual to see activity like this from certain law firms. However, according to our policy, we don’t comment on this type of activity.”
As with virtually all of the financial news that has come out of the company for years, the latest news is disquieting for Pro Tools users. While it tries to develop new technology and repair broken customer relationships, Avid now also has to focus on getting its house in order and avoiding sweeping legal action by disgruntled shareholders.
In an interview last week with SonicScoop, Hernandez offered assurance of greener pastures ahead for Pro Tools users worldwide. The long-term impact of these legal developments on the Pro Tools product line, and the service that backs these critical systems up, remains to be seen. It’s safe to say, however, that audio professionals everywhere will be watching Avid’s bottom line – and wondering about what’s going on in the accounting offices — more alertly than ever before.
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