Fearless Rich Lister Unfazed by Plummeting Profits: What Fuels the Unshakeable Confidence of a Tycoon?

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Beneath the storm of plummeting profits, the unwavering confidence of a fearless rich lister beckons us to uncover the source of their indomitable spirit.

Blackmagic Design, a prominent employer in Melbourne, anticipates a further decline in profitability for the current year, followed by a recovery driven by research and development initiatives.

Blackmagic’s Rollercoaster Ride in the Era of Screens and Supply Chains

The company, renowned for its video and broadcast equipment widely utilised by Hollywood studios and social media influencers, has experienced a significant decrease in net profit from 2020-21 to 2021-22. 

Despite reaching an all-time high of $153 million during the pandemic-induced surge in screen time, the after-tax profit plummeted to a mere $45 million in the previous fiscal year. 

This profit decline was accompanied by a decrease in sales from $769 million to $616 million. 

Blackmagic’s Puzzle of Parts and Production Lines

Grant Petty, the company’s founder, expects profits to be even lower in 2022-23, despite sales recovering, due to persistent supply chain challenges.

Blackmagic presently employs 1500 individuals at its Port Melbourne campus, while an additional 2000 employees work at factories in Singapore and Indonesia.

Mr Petty, who co-established Blackmagic in 2001 out of frustration with the high costs and cumbersome nature of the equipment he encountered as a post-production software engineer, acknowledged that the supply chain problems endured by the manufacturer during the pandemic era persist.

“It has transitioned from shortages to peculiarities. Each part presents a unique narrative and distinct challenges,” stated Mr Petty, whose net worth has decreased to $950 million this year, down from $1.4 billion the previous year.

“We are still facing year-long lead times for many components, and suddenly some suppliers are unloading a year’s worth of stock on us, resulting in significantly higher inventories than we desire.”

Blackmagic’s inventories have already risen to $356 million in 2021-22, compared to $258 million in the previous year. As this year draws closer, Mr Petty anticipates they will contribute even more to the expenses column. However, the accumulated components stock offers protection against price inflation in the final products they will eventually become.

Defying Uncertainty with Production Line Investments

Due to the prevailing uncertainty, Mr Petty has substantially invested in installing several new production lines at the company’s factories.

“As long as we remain uncertain about the arrival of parts, we must have the capability to swiftly ramp up production when they do arrive, even if it means completing a week’s worth of production in a single afternoon,” he remarked.

Despite these challenges, Mr Petty affirmed that Blackmagic had maintained its research and development expenditure, averaging $6 million annually over the past few years. He expressed confidence that the company would restore profitability to an upward trajectory starting from 2023-24 while upholding its longstanding commitment to never laying off employees.

“The comprehension of intellectual property within the Australian business community remains limited; however, as we do not rely on external investors, we allocate the necessary resources accordingly,” stated Mr Petty.

According to Mr Petty, Blackmagic’s new production switcher embodies the capabilities of an entire television station within a single product. Its price of $US4595 ($6687) has generated significant enthusiasm and demand in the United States.

Blackmagic’s Cinematic Innovations Echo Across the Industry

Furthermore, Mr Petty emphasised the growing role of artificial intelligence in Blackmagic’s product lineup. All products are meticulously designed in-house, except for semiconductors.

Mr Petty announced future enhancements to Blackmagic’s Da Vinci Resolve post-production studio, a powerhouse extensively employed in the film industry, including recent blockbusters such as Thor: Love and Thunder and Top Gun: Maverick. These updates will enable automatic object identification and colour grading, resulting in substantial time savings during editing.

Following Blackmagic’s acquisition of the renowned Australian audio brand Fairlight in 2016, Da Vinci Resolve now incorporates its iconic features. Mr Petty revealed that the company’s technicians have successfully employed AI to extract voices from noisy backgrounds and recreate them in a “clean” soundscape.

“While there are still unresolved questions regarding manipulating someone’s voice to convey any desired message, we are preparing to launch this feature,” remarked Mr Petty. 

This development aligns with Beatle Paul McCartney’s recent announcement about utilising similar technology to isolate John Lennon’s voice from a demo recording plagued by background noise.

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