Today, Avid issued a press release titled: Avid Announces Appointment of Deloitte & Touche as New Audit Firm. Some key points in the press release and the 8-K are:
- Avid doesn’t expect that it will be able to file its financials by March 14, 2014. It expects that delisting is likely.
- Its current auditor, Ernst and Young, is being replaced by Deloitte.
- From the 8-K: “As of the date of this Report on Form 8-K, material weaknesses in the Company’s internal control over financial reporting continue to exist.”
- Avid is adopting a rights plan. It looks like a poison pill to me.
- The Company expects that cash expenditures in 2014 related to the ongoing accounting evaluation through completion of the evaluation will amount to approximately $25 million to $34 million.
From the perspective of Avid’s high-end professional customers, all of this is highly unfortunate. The well-being of these customers will be affected if Avid is no longer updating the software and issuing new versions of it. They want to know that Avid is financially sound because their livelihood depends on Avid. Avid should come out and put any speculation about its financial well-being to rest. It should be louder when it says that the “Company’s cash balance on December 31, 2013 was approximately $48 million and it had no debt or draw on the available line of credit with Wells Fargo”. It should explain to its customers why a delisting would not in any way affect its commitment to updating its software. It should file its financial statements as soon as possible. I don’t understand management’s lack of urgency and why it still hasn’t filed financials (it’s been almost a year).
