Avid Technology shares sink on disappointing 1Q results

Shares of Avid Technology Inc. sunk on Friday, a day after the multimedia software developer fell to a loss in the first-quarter and widely missed Wall Street expectations, and two analysts urged investors to unload their shares.

After the bell Thursday, the company reported a loss of $21.1 million, or 54 cents per share, compared with a profit of $20,000, or breakeven per share, a year ago. Excluding one-time items, Avid said it lost 30 cents per share in the quarter.

Analysts polled by Thomson Financial expected, on average, a per-share profit of 6 cents.

Revenue decreased 9 percent to $198.3 million from $218.9 million, in the year-ago period, and fell short of Wall Street's target of $216.3 million in sales.

In a note to investors, titled "When Directionless, Time is Not a Friend," Kaufman Bros. analyst Barbara Coffey backed her "Sell" rating and $15 target price on the company. That price target projects the stock will decline 39 percent over the next year.

The analyst pointed out that its revenue decreased in all its business segments except its consumer video division, which saw revenue growth of 13 percent.

In their conference call, management said it is conducting a strategic review, and would announce details of the company's new direction and plans in July. Coffey, however, remained skeptical, saying that while Avid reviews its offerings, sales are falling. Meanwhile, Avid has been cutting prices, and the analyst has doubts that its reduced pricing and new products will be able boost sales in an increasingly competitive market.

Likewise, D.A. Davidson analyst L. Alan Davis called Avid's results disappointing and downgraded the stock to "Underperform" from "Neutral," and cut his price target to $20 from $25. The analyst said while he expects sequential improvement throughout the year, the business environment _ particularly for its professional video segment _ appears weaker than he had anticipated.

Avid shares dropped $3.34, or 13.6 percent, to $21.30 in midday trading. The stock has lost 36 percent since hitting its 12-month high of $38.78 on April 26, and is off 13 percent since the start of the year.