Avigilon Analyst's Theory On Ex-Execs: "Road to Riches"

By: John Honovich, Published on Jun 23, 2014

Avigilon's stock tumbled after their CFO departed, a culmination of 4 executives out in half a year. Many investors and financial press commentators cited 'management turnover' as a concern.

Now, an Avigilon analyst has an intriguing new theory about why these executives were leaving and what Avigilon's CEO prefers.

"Road to Riches"

Here's the theory from Robin Manson-Hing [link no longer available], Research Associate at CIBC World Markets, forwarded to us by an investor:

"When CFO Brad Bardua joined Jan 2012, neither the company nor the employees joining figured they would see $30 stock prices so quickly. The road to riches came so quickly for them that they were in a position to leave earlier than expected (despite Vancouver living costs!). I believe this is the primary reason for the head of marketing (Keith Marrett), director of hardware development (Mike Neufield), HDSM System Architect, VP of engineering and perhaps even the previous COO leaving. All of these guys left to no new job. When speaking to Alex [CEO] I get the feeling that he has more confidence in the work ethic, talent and drive of executives at the Dallas office than that of Vancouver (who would have guessed!) and that an increasing number of these senior execs will come out of Dallas." [Emphasis Added IPVM]

On the other hand, when people leave to no new job, it is frequently because they have been forced out / fired.

Manson-Hing added:

"When Bardua joined at the start of 2012 he had a salary of $180K with options that were worthless as the share price was under the IPO and exercise price of $4.50.

At a stock price of $30 at the time his job was posted on Caldwell partners website, his vested share options (the last set of which would have vested in April 2014), acquired shares, salary and bonuses would have totaled close to $3 million gross."

This theory shifts the emphasis from potential internal concerns / irregularities to questions about the former executive's character.

Sales Takes Over

The power shift inside Avigilon to the sales team (i.e., the Dallas office) is especially notable. This was fairly clear when the VP of Sales ascended to COO (i.e., when the Vancouver based Exec VP of Operations 'left' or was pushed out).

What will be interesting to see is whether the hard charging sales organization's culture and tactics will adapt well to the rest of the organization (who allegedly have lower work ethic, talent and drive).

CEO Meeting with Investors

Over the past month, Avigilon's CEO has been flying out to meet with various investors and analysts. The stock price indicates that he is doing a good job of convincing them. After bottoming out under $19 per share, the stock price has rebounded to $23+. Though this is not all the way back to the $26 level before the CFO exit, it has increased significantly.

Whether or not this theory about the outgoing execs is true (we are skeptical), this points to Avigilon rallying around its increasingly powerful sales organization, who has definitely delivered the revenue growth powering their stock valuation, but will now be charged with the more challenging task of shaping the entire company.

8 reports cite this report:

Now Avigilon's VP of Marketing is Out on Aug 13, 2015
In 3 months, the EVP of Engineering, the SVP of Sales and now the VP of Marketing of Avigilon have exited. In this note, we review what happened...
Manufacturers: Get Paying or Get Sued - Avigilon Patent Licensing Program on Jul 29, 2015
The new Avigilon 'patent licensing program' is starting to roll out, confirmed Avigilon's CEO on today's earnings call. This is just a month after...
Avigilon EVP Engineering Quits on May 12, 2015
One of the big criticisms last year was multiple executives leaving Avigilon. Now, Avigilon's EVP of Engineering quits out of nowhere. In this...
Why is Avigilon's Stock Falling Like a Knife? on Oct 08, 2014
A week ago, a prominent Avigilon investor admitted, "Nobody wants to hold [Avigilon stock]. Everybody wants to sell it." He then recommended buying...
Avigilon Profit and Stock Price Drops Q2 2014 on Aug 11, 2014
Battered by the controversy over their CFO's badly timed exit and a report questioning their revenue recognition, Avigilon further disappointed...
'Sick', 'Greedy' Avigilon CFO Gets A New Job on Jul 31, 2014
Avigilon's explanations for their CFO crisis are falling apart but, in the meantime, it has worked well to boost their stock...
Avigilon CEO Looks To Rebuild Investor Confidence on Jul 02, 2014
Avigilon's CEO has been making the circuits seeking to rebuild investor confidence following their shock CFO departure. Here he is on Canadian...
Avigilon Dirty Tricks on Jan 15, 2014
Avigilon's products are strong but their marketing is consistently and utterly irresponsible - one dirty trick after another. While their rapid...
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