Corel Buys Pinnacle Products, M-Audio Ends Up at inMusic
Avid got out of the consumer business today, announcing the sale of its M-Audio line of consumer audio products and its Pinnacle consumer video editing hardware and software (including Avid Studiio and the Avid Studio iPad app).
M-Audio instruments and controllers, audio IO devices, and speakers have been sold to inMusic, while the Pinnacle products go to Corel. The deals together were worth about $17 million, Avid said, and both closed today.
Executives took pains to point out that the sale does not include products from the Pro Tools or Pro Tools Advantage product lines. That means pro IO devices like Mbox and Fast Track, as well as the Artist control surfaces, are still part of the Avid family.
About one-fifth of Avid's employees — more than 350 — will be affected, with some of them moving to the divisions' new owners and others losing their jobs as a result of the sale. COO Kirk Arnold is leaving today, said CEO Gary Greenfield, referring to "some tough choices" that were made.
The workforce reduction, which will leave Avid with a headcount of around 1500, should be "substantially complete" by the end of the third quarter, according to CFO and CAO Ken Sexton.
Together, the consumer-focused operations contributed approximately $91 million of Avid's revenue in 2011 — about 13 percent of the company's total — but the company expects to save $80 million per year, mainly in payroll, by divesting them. The company said some savings will come from closing down facilities, but declined to specify which ones will be affected.
Sexton said gross margins on the consumer products were "in the mid-50 percent range," which is about 10 percent lower than the company average. Accordingly, Avid expects gross margins to improve as the company heads into 2013.
Looking to the future, Avid said it expects compound annual growth of 6 to 8 percent in the "media enterprise" market, which includes broadcasters and news and sports organizations, and of 2 to 3 percent in the "post and professional" market, which encompasses one-man shops, boutiques, recording studios, rental companies and large post houses that create content but don't distribute it on a large scale to consumers.
