Why is Avigilon's Stock Falling Like a Knife?

Author: John Honovich, Published 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 it.

He evidently was right, at least partially.

In the past week, Avigilon's stock has dropped another 20% and is now down nearly 60% from its high earlier this year.

Avigilon's market valuation is down over $900 million since then.

[Update October 10th - Avigilon stock ended the week at a new low: $13.90 per share.]

From speaking to investors and analysts covering Avigilon, here are the main reasons they are offering for the fall:

  • Lack of confidence in CEO
  • Issues with management team
  • Problems in hiring / scaling
  • Low cost competition increasing
  • Competitor products catching up
  • Accounting irregularities
  • Growth rate sharp decline

Inside, we provide our analysis on how accurate we believe each reason is.

* **** ***, * ********* ******** ****************, "****** ***** ** **** [******** *****]. ********* ***** ** sell **." ** **** *********** ****** **.

** ********* *** *****, ** ***** *********.

** *** **** ****, ********'* ***** *** ******* ******* **% and ** *** **** ****** **% **** *** **** ******* this ****.

********'* ****** ********* ** **** **** $*** ******* ***** ****.

[****** ******* **** - ******** ***** ***** *** **** ** a *** ***: $**.** *** *****.]

**** ******** ** ********* *** ******** ******** ********, **** *** the **** ******* **** *** ******** *** *** ****:

  • **** ** ********** ** ***
  • ****** **** ********** ****
  • ******** ** ****** / *******
  • *** **** *********** **********
  • ********** ******** ******** **
  • ********** **************
  • ****** **** ***** *******

******, ** ******* *** ******** ** *** ******** ** ******* each ****** **.

[***************]

CEO **********

*** #* ******** *** ********* ** ****** '***********'. ** *** ******* ******* ******. *** **** ****** ********* transformed **** * ********* ** ****** ********* ** ***** ********* ***'****' *** *********** **** * *** ***.

*** ****** ******* ******* ** ** * ******* *****, ***** each ***** ***** **** ** ******* ********** **** *** *** is ***** * *** ***. **** ** ****** ******* ********* loved *** * **** *** **** *** ***** ***** *** shooting *******.

******* ** ** **** ** ***, ** ** ********* ******* a *********** ****.

Management ****

*** *** '***********' *** ***** **** ********** ***** ** *** **** ****, ********* ***** ** *********, ***** ** **, ***** ** ************** ******* *********.

*******,******** ******** *********** * ******** ******** *** ************** ** ********'* ********** ****.

******** ** ***** ********* *** * *********** ***, ***** ** a ******* ** *** ******* **** *********.

Hiring / *******

******** ********* *** ***, *** ********'* ********* *** ****** *****, ** Q2 ****. ******** **** ***** ** ***** *********, ** **** 5% *** *** ******* (*** ** ***).

*******, *** ******** ** *** ******** ******** ****** ******** ***** a **** **** *** **** * ******. *** **** ******* is ********* ****** ** ** *********, *** **** ***** ****** ***** *** ********** *** *********.

****** ******** ***** ***** ****** '*' *******, *** *** ********* we **** **** *** ********* ******** ********* ** ****** ****** **** * few ***** ** *** ***** **********. ***** ** ********* ** exodus ** *** **** ****** **** *** ************ ************* **** Axis, ******* *** ********* ** ********. *** **** *** ***** price ******** **** ****, **** ** ** **** ****** ****** to **** ****.

Low **** ***********

******* **** ***** **, *** *** ***** ************* *** ***** attack ** *** **** *********** - ********* **** ********* *** Dahua, ** ********** - **** ********* ******* *** ********* ***** pricing. ******, ************* ******* ***** **** ******* #* *********.

*** ******** *******, ** *** ********* ** *** **** ****** alternative, ***** ******* **** ******** ******* ** * ***** **** alternative.

******** *** **** * *** **** ****** ****** (****** *** Chinese ************ *********) *** **** **** **** ***** ****** **** while ****** **** ******* (*** *** ** ****** ***** ********** *** ****** ******).

Competitor ******** ******** **

**** ********* *** *** ******** / ********* / ******* **** competitors *** ******** **.

*********, **** *** *** *** *** ********** ***** ***** **** was**** ****.********* ******** * ***, **** *** ************ *** **** *********, ***.

********** ********, ******** ** ***** ***** ****, **** ********* **** ***************** ** ******** *******.

Accounting **************

**** ******, ** ***** ** ******** ********** ****** *** ********, ******** *** ******* ********* ********.

**** ** **** *** **** ********* *** ********'* *** ************ denied ******* ********. *******, **** ********* *** ****** *** ******** of '** ***** ** *****, ***** **** ** ****'.

Growth **** ***** *******

******* ********* ****** **** *** *** **** ********* ** **** is ~**%. ***** **** ** ***** *** ****** ***** ***** ************ manufacturer, **** ***** ** * **** ** **** *** **** Avigilons' ****** ****** ***.

*******, **** ********** *** **** *********** *** ***** *** **** time, ** ** **** *** ******* *** *** ***** ******* has **** ************ ** *** **** *****. *** ****** ** that, ***** *** ******* ***** **** ****, *** ******* **** leaked *** **** **** *** **** ***** **** *** ******* estimates.

Irrational *********

** *** ********* ** **** ****, ********* **** ************ **********. The ********* *** **** ******** *** ***** ** **** ** astronomic ***** *** ***** ** ****.

***, ** ** ******** **** ********* **** **** ******* *** other ***.

What's ****?

********'* ****** ********* ** ~$*** *******, **** ~$*** ******* **** in *** ****. *** * ******* ***** ******** ** ****** of ******* ** $*** *******, ****'* ***** ***********, **** ** you ***** ******** ** **** ***** ** ** ** ******** normal **-**% ****** **** *******.

*** *** ***** *** ******* ********** **** ******** *** ********** irregularities. ** ****** ** ***** **** ** ** ** ****, the ***** ***** **** ***** ****** ** *********. *******, ** Avigilon ** ****** ************* ** * '******' ** ***** ************ manufacturer, ****** ******.

Industry ******

***** ***** ***** ******** *** **** ***** *********** *******. *** pressure **** ****** ** ********** ** ******* *** ********** ***** down ** *** ****** ************.

******** ***** *** ***** ***** ** ******* (** ***** **** what) ** ******* **** ******** *** ******** ******** ***** *** new **********.

******** ***** *** * ****** *********** *******, ***** ******* *** loads ** **** ** *** ****. *******, ********'* ***** **** the **** *** ****** **** ** ******** ** *********** ** it *** *******.

Comments (27)

(** * ******* ** **********, * ** *** **** ******** stock)

********* ** ******** ****** *******, **** * ***** ******** ******** (including *** ***, ******* *** *** ***** ****** *********) **** bought **** ******** ***** ***** *** ***** ******* ** ***. These *** ********** ********* ** *** ******, *** *******, ***** if ******** ***** ***** ** ** ***** ** *** ****** of ******** ****** ******** *****. *** *** ******* *** **** any ***** **** **** ****.

**** **** ** ********** ****** ** ******* ******/******* **** ** publicly ********.

****** **** "****** ***** ** ***" **** ******* ***** *** a **** * *****, *** *** ****** ** ***** ** the ******** ***** ****** ******. **** *** **** **** **** worthless ******* **** ******** **** *** ********* **********, **: *** there **********/********* ****** ** *** *******? ******** ******* ************* *** ***? ***... **** ** ** **** interest.

****, *** ******* ****** *** **** ********** ********** ********* ** Avigilon, *** ** ** ** ******** ******** ******* **** ***** money ** ******* *** *******.

**** **** *** * *** ** ***** *********** ***** ***** security ********* **** ** **** ** ********** ** **** *********, which ***** ** * ******** ********. *** ********* *** ***** of ********* ***** ****** ***** *** *****-******* **** *** **** a **********. ***** ** ****** ** **** *** **** ******.

***, ** ******** **** ** *** *****, ********* *********** / rebutting ***** * ****** ** ****.

****, * ***** *** ****** *** ******* **** ****, *** I ** *** ********** (** ****** **** ** ****) **** you *** ************* ****-******** *** *******. *** ******** *** **** raised ***** ******** *** **** *** * ***** ****. *** they *** *** ******* ** ** ****. ** **** ********** was ******** **** ** **** ****** **** **** *** *** paid (**********) ******* *********** ** ***** ***** ** *** ****** value ** *** ****.

******** ***** ** **********, ***-**** ***********, ****** *********, *********, ****** rates ... *** ... ** **** **** *** ******** (** I *** *** **) *** ********* * ***'* **** *** free *********, ****** ******* ***** ****** **********.

**** ** *** **** ****, ****** :)

********* ******:

*** ******** ******* ** **** ** ********* **** ******** **** now ***** ** ****** ****** ** *** ******* ** ******* and **** ***** ********* ** *******.**** *****:

"**** *** **** ***** ******, ********* ** ***** ******* ******** regions *** ****** ** * **** ****, ***** ******* *** channel ********** **** ***** ************ ** ****** ****** ****** ** the ******* ** *******"

**** ** * **** ******** *****, ** ****. ** ***** CIBC ***** **** *** **** *********** **** *** ******* ** was ****** **** ******** **********. **** *** *** *******.

******* **** ** ********* ***** *********** ***** *****, ****** ******* they *** ******* **** ***** ****** / ********* / ***** regions **** **:

*** **** **** ****** *** **** ****** ** ** **** point?

*******, *** ****** ** ******* ***** ** ****** ** **** more ************. ** ***** ******* ********* ******** *******, *** ** well ********, *** **** **** **** **** "**** ***** ** indication ** *** **** *** ******* ** ******* ** **** down ******** ** ***** ** ******."

** *** ***** ****, ******** ***** **** ******* ** ****** growth ***** ** * ******** ********* ******. **** ********* ***** to ******** ** ** ** ********* ******** **** ******** **** them ****, *** ** **** ***, ** ** ********* ** image **** **** ********* ********** ** ***********.

** ******'* **** ****** ** * ***** **** ** ***** than ****** *** ****. ***** ********* ***********.

**** **** ******* ***, ********** ** **** ******* *** ** what *** *****, *****?

** **** *** *****-****** *** *** ****** ******** *** ********* clearly, ***.

** **** ******* ***** *** *******, ***** ***.

** *** ** ***** ****, **** **** ***** **** *****, who ***** **** ****** **, *****, ***? ***'** ** ****** fiji. *** **** ****** **** ******** *** *****.

***** ********** ** ** *******.

** ***** ******* ******** ******* ** ****, *** * ***, and ****** *** ***** ********, *** ********* ** ******** ** my ******* ******** **** ******** ******* *** **** ***** ******* from *** **** ****** ****** ** *,*,*, *** *** *******. Everyone *** ***** *** ****** ** ****, *** **'* ********* difficult *** ***** ******* *** ******** ** ******* ***********. ** is *** ***** ******** ******** *** **** **********, *** ***'* Avigilon ***** **** ********.

* ******* *** *** ** * ******* **** ** * move **** ** ****, *** ** ** ***** *** *****, and *** *****.

******* *** ***** ***** * **** ******.

***** **** *** *******, * **** ** **** "**** ** where *** *** ****", *** * *** **** ********** ** .02 ** *** *******, *** * ***** ****** ***** ******. Had **** ****** *** ****** **** **** ** *** ** lineup, *** ******** ******** ************* ** ***** ***** ****, ** they **** *** **** *** *** ********** ***'*, *,**,** **** embedded ***. * ******* **** **** ******* ** ******* ************ too....

* **** ** ******** **** **** ***. * **** ******* selling ******** *** **** ** *** *********. **** * **** amount ** *** **** ******* *** ** *** * *** (not ******** *** ****). *** ***'* ** ****, ***** ******* were *********, ** **** ** ******** ********** **** ****. **** were ******** **** ** **** ***-*** *****. **** *** ********** had ** **** ***** ** *** * ********* ****. * would **** **** ***** **** ** **** *** ******, *** because * ******'* *** *** ******* *****, *** ******* *** picture ******* ** * ******* ****** *** ** ***.

*** **** *****'* **** ***** *** ******* ****** ** ******* space **** **** ** ** *** **** **** **** ***** cameras **** ********** ***********. ********* **** ***** ***** ******* **** Genetec, *********, *****, ***** *** ****** ***** **** *** ****.

*** **** ***** ******** *** *** ******* ******* *** **** of *** ******** *** *** ******** *** **** *** *** not ***** **. **** *** ** ******** **** *** ****, not * *********.

****** "*****" ******* *** ***** ********* ** *** ** *** solution ** **** ***** ******** ********* ** ***** *************.

******** **** ****? ** ******* *** ********* ** *******/**** ***********?

** ******* *******, *** ** **** ***** *** ******* ** wavelet *********** ******* *** ******** ****** ********** ** *** ***** vendor **********. ******* *** ****** ** *** **** ******** ***** industry ** ***, *********, ** ***** ******* ***** ******.

** *'* *** ********, **** ** *** ** ********** ** all ***** ** **** - ******* ***********.

* **** *** ** ********* ** **** *** ******* ****** take ** **** ** **** ***** ******* ***** ******** ** fall..

***, ***. * ** *********** **** **** *** ** ****. I **** ** *** *** ***** **** ***** ** ** sales ************* ***** *** ***** ******** ******** ****. **'* * great ***** **** ** ******. ***, *****, *** ******* ** the ************ ******** ** ** *** *** **** ** *** movie ********. *** **** *****.

**, *****, ** **** ** **** ******** ********** *** *******, those ******* *** *****. ** ***, **** *** ****. *** that's **** ******* ** *** ************ ******** *** **** * can **** ***** **.

***'* *** ** *****, ***** *** **** **** ****** ***** JP2K. ********* **** **********. *** ** *** ************ **** ** things ******* *** ****** ******** ******** *.*** ** * ******** with ***** ******* *****, ****** ******** ** ********, *** *****-***********- Avigilon ********** **** *** ***** **** ** ******** *** **** line.

***, * ***** ** **** ******, *** ** ** **** we *** ********* *** **** ** ***** ** ********* ******** in ****/****/****. * ***** *** *****, *** **'* ****** ******** we'll *** ******** ***** ***** ***** **** ****.

"**'** *** ******** ***** ***** ***** **** ****."

* ******. *** ****'* ********-*************** *** ****** *** ** ***** *********** *** ****.

***, *** *****-****** ********* ** * **** ***********, ***** **'* loss ** *******.

*** ***** ** ******** ******* ** *** **** **********, ********* frame ***** - *.*., *****/**, *****/**, *****/* ** ****'* **** you ******.

**** ***'* ********* ******* **** **** ** ************ ****** ****** the *** ******** ********* ******, **** ** **** ** ****** the ****** ******?

*** *** *** ** ** ****,***************, * ******* ********* ********* ** ****.

"* **** *** ** ********* ** **** *** ******* ****** take ** **** ** **** ***** ******* ***** ******** ** fall.."

* ******* *** ***** ** **** ********* ** ******. ** isn't *** **** ** ******* ****** **** ***** ******** ** 'Achilles ****' - ** * ****** ** *****.

** ******* ***** ** **** (***** **** ****), ******* *********** ********** **** *******, *** **** ********.

** ** *** ************ ** ************* ** ***** *********** ********* ** *** ******** ****. ** ****** **** ******* *****, if ******** ******** ************* ****** **** ***** **** ** **** always **** ************* **** ** ***** **** *********** ******* **** produce ******* **** *****.

********** ****. [********** ******* **********]

*** *** ** ******** **** ******* *** ***** * *********** factor ** *** ******** ** ****. **** ****, ** *** hard ** ****** ****-******* **** *** ** *** ******** ** it ****'* ****** *** *****-****** *******. **** *** ** ******* of *****-********* ******* *** ******, ******** ******** ** *** *********. With *** ****** ************ ** ********-*********** ******** *** ****-**** ******** becoming **********, **** ** *** *** ***** *** ** **. It *** **** *** * *** ***** ***, *** * think **** ** ********* ** *** ******* ******* *** ** the ****-*** **** ********, ** **** ***** ***** **. *** same **** ******** ****** ** *** ****** ******** **********, ** hardware ********** ******** **** ****/**** **** ******** *** ********* ** JP2K, **** *** **/** ********.

* ***** ******* **** ** ********* ** *** ****** *** it's ******* ** ****** ** * ** **** ****** ** different ***** *****. * ******* **** ***'* ********* ** *** onvif ****.

*********** ******* ** *** ****** ** **** ****** ***. ***** supports **************. *** *******, ******* ***** ******** ** ******** ******* via ***** *************.

** ********** **** *********** ** *** ********* *** ******** ******* follow *** ******* ***** *****, ****** ** ***** ***** ***** and/or *********** *****.

**** *** ***** ******* ** ***** ***** **************. ********* *** Bosch *** *****, **** ** * ****** ******. *** ******* streams *** ****, ******* **********, *** *** ********* ******* *** 720p, * ***. *** ******* *** *.*** (*** *** * little *** *** *** *** ** *** *****).

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