No, I don’t mean the sort of crash where AutoCAD stops working. The current financial crisis, I mean. I must preface these comments with a disclaimer. I have no qualifications in finance and make no claim of financial expertise. These are purely a layman’s thoughts. Don’t buy or sell stock based on what I have to say here. Toss a coin instead.
So, what on earth am I thinking? I’m thinking that although Autodesk (along with most other companies) will undoubtedly suffer greatly from the coming economic conditions, it’s not all dark cloud. Here are some potential silver linings.
Autodesk is cashed up. If its competitors aren’t all carrying enough fat to survive the lean times, Autodesk could come out of the post-crash period with greater market share than before. Of course, this is contingent on Autodesk having products, customer service and a customer-friendly outlook that are attractive enough to win over any orphans. Some serious reversal of neglect in these areas will be needed, which involves spending more, not less. So it really is a very good thing that Autodesk has large wads of your money lying around for use in times like this.
Companies with useful technology might become available cheaply. Some smart acquisitions could give Autodesk products some advantages over the competition. (Edit – Between writing this post and publishing it, I see Autodesk has just done exactly that with Softimage).
Autodesk can buy its own shares back while they are cheap. If it needs cash in a few years, it can sell them again at what will undoubtedly be much higher prices.
I don’t really care whether Autodesk does any of the above, but I do care about the next one. Autodesk has been living in a Soviet Russia-style fool’s paradise for years with its yearly product cycles. Practically everybody who knows anything about the software knows that the 12-month cycle is unsustainable because of the significant harm that it is inflicting on the products. But it has been an undoubted financial success, so far. Autodesk is addicted to it, but like any unhealthy addiction it will ultimately be fatal. What to do?
This financial crisis represents a get-out-of-jail-free card for the Autodesk board. Announce the long-overdue death of the annual cycle now, while Autodesk shares are already undervalued. Any negative reaction from a share market that doesn’t know or care about product quality will be hard to identify as having a specific cause while the share price is being flushed down the toilet anyway. Announce it in conjunction with something that will save Autodesk money, like abandoning some of its sillier legal adventures, and it will be even harder for shareholders to apportion blame to any particular measure. In a month or two, nobody will be able to identify specific causes of the stock being at whatever level it happens to be at that time.
Such a great opportunity for Autodesk break out of the yearly rut and rescue its products from a sad slide into semi-permanent sub-mediocrity is unlikely to be repeated any time soon. It’s a nettle; it’s going to sting, but it must be grasped.
Can Carl Bass be Autodesk’s Gorbachev?