Avid Technology, Inc. (Nasdaq: AVID) announced a restructuring plan Wednesday which will result in a charge around $9 million, and annual cost savings of about $20 million, as the company refocuses its ailing business on the Internet.
Shares closed at 11 1/2 Tuesday. Shares have been on a steady slide since they plunged following a warning that waning demand would hurt the company's first quarter this year.
The restructuring plan should result in annual cost savings of about $20 million, through staff reductions of approximately 200 people, or 11 percent of its worldwide employee base. The restructuring primarily affects the company's headquarters in Tewksbury, Massachusetts, as well as sales and marketing in the U.S. and Europe. The company also said it is planning "reductions in discretionary spending," and it will take a charge of between $9 and $10 million in the fourth quarter in connection with the restructuring.
As previously announced, Avid now operates under new management, with David A. Krall as president and chief operating officer and William L. Flaherty, acting CEO.
In the Internet arena, Avid said an editing and publishing system for the emerging Web broadcast market is in the works. Avid Xpress DV, which will be available in the first quarter of next year, is a first step into this market. The company also plans to launch a new Web site to provide interactive information to new media and post-production professionals, its target customers.
The company said the restructuring should enable Avid to return to profitability and growth by a resizing of expenses to meet current revenue in the company's core business. Avid said it plans to grow its share of the television on-line finishing and new media markets in the near term.