The day after the Academy Awards is usually a celebratory event for Avid Technology Inc., as the Burlington company gets to proclaim how many winning Oscar movies used its video and audio editing products.
But on Monday Avid also disclosed that an unspecified accounting problem prompted the company to delay indefinitely its fourth-quarter earnings report, which was originally scheduled to be released on Tuesday.
Avid offered little additional explanation. But disclosure of the accounting problem comes just a few weeks after chief executive Gary Greenfield stepped down and was replaced by Louis Hernandez, a longtime member of Avid’s board of directors.
Monday’s announcement sent Avid stock down 68 cents, about 9 percent, to close at $6.98 on the Nasdaq stock exchange
Despite the Oscar glory, Avid has been a troubled company for years. It has not been profitable since 2005, as a host of rivals, including Apple Inc. and Adobe Systems Inc. , offered editing products of comparable quality at lower prices.
To fight back against Apple and Adobe, Avid spent more than $600 million buying two companies in 2004 and 2005 that sold audio and video editing products aimed at consumers. Instead, Avid wound up selling its consumer businesses last year for just $17 million.
Founded in the 1980s, Avid transformed the way movies were edited. With the Avid system, films were first translated into a digital format, then edited using computers instead of scissors. By the 1990s, Avid’s gear had become standard equipment in major movie and television studios worldwide, and Avid had launched a line of audio editing products.
“They invented a lot of this stuff, and they are the standard.” said Joe Zaller, president of Devoncroft Partners of Coronado, Calif., a market research firm that specializes in digital media. “Nobody holds a candle to Avid in this stuff.”
In a statement issued Monday, Avid said it would delay release of its latest earnings report “to provide 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.” The statement also said that the company was unable to estimate when it would release the earnings report.
As for the leadership change, Douglas I. Sheer, chief executive at DIS Consulting Corp., an entertainment media research firm in Livingston Manor, N.Y., noted that Greenfield, the former CEO, will remain a member of Avid’s board. “That tells us that he’s not being driven out in disgrace,” said Sheer. “It simply tells us that they’ve decided to change their leadership.’’
Sheer noted the personnel shift comes about a month before the annual trade show of the National Association of Broadcasters, the industry’s leading event. He speculated that Avid’s new CEO could reveal a major strategy shift at the show, such as the sale of more product lines, or a plan to acquire a company to strengthen its high-end product lines.