Discreet Logic, Canadian provider of digital image creation software, has warned of another set of poor results for its second quarter and, as a result, said the price for its merger agreement with Autodesk Inc has again been reduced. The Montreal- based company said, based on a preliminary review, revenues for the December quarter are expected to be between $27m and $29m, resulting in a bottom line in the range of a loss of $0.01 to earnings of $0.01. Analysts surveyed by First Call were expecting $0.15. As a result of the poor showing, Discreet announced that its agreement with Autodesk has been amended, revising the exchange ratio from 0.48 Autodesk shares for each Discreet share to just 0.33. The story is not a new one, however, as the price of the deal had already been reduced from the original 0.525 level after a similar first-quarter profit warning. Based on the closing price back on August 19 when the acquisition was first announced, the total value of the transaction would have dropped from $530m to $328m. But due to a resurgence in Autodesk’s share price in the past six months, the actual value has only dropped to about $495m. Discreet is blaming the anticipated weak financial results on continued effects from the lack of a sales and marketing senior executive during the quarter, combined with several field vacancies and slower-than-expected sales in Europe and Asia. Another problem was a greater number of turnkey systems sales through the indirect channel, which the company says had a negative effect on margins. The company also noted that international sales are typically higher in gross margins, making their loss carry greater weight. To address the aforementioned executive problem, Discreet announced that Mirko Wicha has been appointed senior VP of sales and marketing. Wicha was formerly a general manager of global field operations with the Alias/Wavefront software subsidiary of Silicon Graphics Inc.
