There are a lot of neat public companies that are headquartered in the Merrimack Valley, but there are also some you should avoid unless you really know what you’re doing.
One of those that fits in the latter category is Burlington-based Avid Technology Inc. Avid does some pretty cool stuff — it makes and sells software and hardware used in digital media content production. In addition to newsrooms, its technology has been used in feature films, even winning Academy Awards.
But financially, it’s been a bit of a bumpy ride.
On Wednesday, Avid was scheduled to release its fourth-quarter and full-year results for 2016. Alas, the report was postponed, as the company said doing so would allow its independent auditor to complete “routine procedures related to the 2016 financial audit.”
Initial quarterly earnings releases are generally unaudited, but full-year results are required to be — that’s why there tends to be a slightly longer lag time between the end of a quarter and a full-year report than there is for a regular quarterly report.
The fact that Avid needs more time doesn’t necessarily mean there’s something wrong, but investors have a tendency to fear the worst. And indeed, Avid shares plunged 17 percent Thursday to close at $4.44. Remarkably, they’re still up a tiny bit on the year, but that comes after a nearly 40 percent fall in 2016.
For longer-term investors it’s particularly irritating, because Avid has had to do this type of thing before. Three years ago its shares were delisted for 10 months after the company was in the midst of restating several years of its earnings, and hadn’t filed a financial report in more than a year.
Lastly, Avid seems to be trending in the wrong direction. After posting $563 million in revenues for 2013, sales slipped to $530 million and $506 million in the next two years, respectively. Three analysts who still cover the company are predicting 2016 revenues to come in slightly higher than the year before, at $510 million.
Who knows? After doing its due diligence, Avid could soon unveil a pleasant surprise. But betting on that isn’t investing. It’s gambling.