AVID: Received a second letter from NASDAQ

Avid (AVID) received a second letter from NASDAQ basically warning the Company again that it has not filed its quarterly and annual reports on time.  This is certainly bad news, but based on lack of updates from AVID the last couple of weeks, it was somewhat expected.  The glass is not empty; in fact, based on the information in the Company's press release, it appears that while things are not good, they may be better than many had expected.

• AVID submitted its plan to NASDAQ regarding how it will try to regain compliance.  While such plan requires approval from NASDAQ, if approved, the Company will have until mid-September to file the CY '12 10-K.  If it can do that, we think the quarterly filings will follow shortly after.  
• AVID provided an update, although a vague one, on what it has discovered during its evaluation of the accounting treatment of maintenance revenues, or as the Company stated, the "Software Updates".  It found that it needs to restate not only Q1 - Q3 for CY '11 and CY '12, but also the 10-Ks for CY '09 - CY '11.  However, according to the Company, while it appears that the main issue is the timing of revenue recognition, "the restatement adjustments are not expected to affect the amount of total revenue ultimately to be earned, or the amount or timing of cash received or to be received, from the sales transactions or the Company's liquidity or cash flow for any prior period."
• The Company also said that it may have overstated its restructuring expenses by around $3.5MM for Q3 '12.  

We are not saying that this is a safe bet now.  In fact, as this 'discovery process' is ongoing, AVID could find additional issues.  However, if (a big if), AVID successfully regains compliance by mid-Sept., one could again primarily look at the Company's valuation and take out the compliance and accounting risks that have dragged this stock down.  And appears that it will drag it down further for the time being as AVID took a 12% dump in AH on Tuesday.