Avid Technology, Inc. (AVID)

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Avid Technology, Inc. (AVID)

Q2 2008 Earnings Call Transcript

July 24, 2008 5:00 pm ET

Executives

Tom Fitzsimmons – Director of IR

Gary Greenfield – Chairman & CEO

Ken Sexton – CFO & CAO

Analysts

Steven Frankel – Canaccord Adams

Paul Coster – JP Morgan

Jim Ricchiuti – Needham & Co.

Mike Olson – Piper Jaffray

Andrew Abrams – Avian Securities

Presentation

Operator

Good day and welcome everyone to the Avid Technology Second Quarter 2008 Earnings Results Call. Today's call is being recorded. For opening remarks and introductions, I would like to turn the call over to the Director of Investor Relations, Mr. Tom Fitzsimmons. Please go ahead, sir.

Tom Fitzsimmons

Good afternoon. I'm Tom Fitzsimmons, Director of Investor Relations for Avid Technology. I’d like to welcome you to today's call. With me today are Gary Greenfield, Avid's Chairman and CEO, Ken Sexton, Chief Financial Officer and Chief Administrative Officer, and Joel Legon, Vice President of Finance will join us for the Q&A.

Before we begin, please note that this call will include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995 including statements about Avid's performance. There are a number of factors that could cause actual events or results to differ materially from those indicated by such statements, such as competitive factors including Avid's ability to anticipate customer needs, pricing pressures, our ability to execute our strategic plan, and adverse changes in general economic or market conditions, particularly in the digital media industry.

Other important events and factors appear in Avid's filings with the US Securities and Exchange Commission. In addition, our forward-looking statements represent our estimates only as of today, July 24th 2008, and should not be relied upon as representing our views at any subsequent date. Avid undertakes no obligation to review or update these forward-looking statements.

During this call, we'll be referring to non-GAAP financial measures. These non-GAAP measures are not prepared in accordance with Generally Accepted Accounting Principles. The most directly comparable financial measures calculated in accordance with GAAP and a reconciliation of GAAP measures to those non-GAAP measures are contained in the press release announcing this quarter's results, and are available in the Investor Relations section of our website at www.avid.com.

And now, I would like to turn the call over to Gary.

Gary Greenfield

Thank you, Tom and welcome everyone to our Second Quarter 2008 Results Conference Call. I'll go over a few highlights of our second quarter, Ken will provide the financial details and then I'll cover the outline of our corporate strategy and organization initiatives, then Ken will wrap up with an update to our 2008 guidance, and Ken, Joel and I will take your questions.

Even as Avid is in the midst of significant transformation, we are maintaining our focus on achieving long-term profitable growth and progressively improving our performance across a number of different business metrics. With that in mind, I'm happy to report a sequential revenue increase of about 12% to 223 million as well as improved margins, resulting in a quarter that was break-even on a non-GAAP EPS basis. While we're certainly not satisfied with breaking even, we do believe that top line growth with improving margins is an indication of continued customer confidence in Avid during our transformation and that we are delivering on our commitment to progressively improving our results during the year.

We are also delivering on our product road map. In the second quarter, as expected, we shipped new releases in each of our flagship product lines with new versions of Media Composer, Pinnacle Studio, and a Mac Leopard compatible version of Pro Tools. The release of the new Pro Editing lineup, which includes Media Composer, Symphony and NewsCutter was particularly significant for us. We've improved the quality, performance and value of the products across the board with upgraded HD capabilities, rock solid response, and support for additional camera and media format. In addition, we introduced a Mac version of our Symphony Editor, reconfirming our strategy of providing the best tools in the industry on both Mac and Windows platforms.

In the second quarter, we also successfully launched the latest version of Pinnacle Studio, our consumer video editor helping us to drive sales of our consumer editing software line to its highest level in more than two years. We do not expect linear increases in studio line across the year due to seasonality, it is indicative of continued strength for us and it's important in marketplace.

Continued innovation, improved quality and reliability and on-schedule delivery of our core product platforms is an important part of our commitment to our customers and business partners, and I am pleased with the early marketplace acceptance of these products.

We are also making progress in the modernization of our infrastructure that are in full swing with our worldwide CRM implementation, which will enable us to better serve existing customers as well as reach new prospects across our consumer and professional brands. This new system will also allow us to become more efficient in our sales and marketing efforts, which we believe will be a component of lowering our overall operating cost moving forward. Taken as a whole, we're happy to be hitting key milestones and showing improvement in top and bottom line results, but that's obviously not the end game here.

As I mentioned on last quarter's call, a lot of hard work being accomplished currently will not show up in the financial results until future quarters. We're not looking for the quick, one-time payout instead for our shareholders we are targeting long-term shareholder value increase.

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