The company just published preliminary results for the first quarter. $152 million in sales fell far below the $160 million expected by Wall Street analysts. Management sees a GAAP operating loss of $15 million, which would be the weakest result since the spring of 2009.
The culprit of Avid’s disappointing numbers is a 30% year-over-year drop in sales to the enthusiast market. That’s where Avid sells tools for making music and movies to amateurs like you and me, helping us make and manage media with somewhat simplified versions of the professional tools. That’s a price-sensitive market that doesn’t play well with attempts to ratchet up gross margins. I’m surprised that Avid didn’t see that backlash coming. Continue reading Avid does the opposite to Motley fool analyst’s advice