Ten years of zero net growth, and four years of declining profitability, should tell you everything you need to know about what's actually happening. They've spent most of their profits from the last decade on faking EPS growth with buybacks while their business was languishing. Now things are so bad, they're hatcheting their most valuable resource: their people.

I think they spent ~$188 million buying back their stock in the first quarter, while losing over $100m in operating income. They paid $85 per share for those shares. Around 80 times earnings, if earnings were still at the old 2013 levels.

It's financial suicide. They're driving Autodesk into a wall at high speeds, while destroying their balance sheet trying to keep the stock propped up with buybacks far beyond what they can actually afford based on present profitability and a reasonable outlook the next few years (which is why they're firing 13% of their staff).

Or put it another way. The cost of the share buyback announced last year could cover the cost of the 13% of workers that are getting fired, for at least two decades.

Autodesk long ago got into the IBM financial engineering business. The consequences of that are getting more unavoidable by the year.

R&D costs climbed by nearly $200 million versus five years ago (when their sales were higher than they are today). That increase is equivalent to ten percent of their sales now. By itself, that expense gain is nearly enough to wipe out their old decent profit numbers.

"Other" SG&A expenses climbed by nearly $200 million as well.

They added around 1,700 to 2,000 employees since the beginning of 2013. Going from ~7,300 to 9,000+. That's probably more than a $200 million total annual cost addition. Then contract sales by $400 or $500 million from those days, and you get a big net financial crush.

Simply put, they bet on growth showing up, which has never materialized. To put it into context, their sales for fiscal 2007 were $1.84 billion (versus $1.95 billion the last four quarters; so realistically zero growth for a decade (!)).

To throw some more onto the fire, they spent over a billion dollars buying back stock over the last 10-12 years or so ($447 million in 2006 alone). As with companies like IBM, that money obviously should have gone to improving the actual business rather than financial maneuvers (trying to fake EPS growth).

Worse yet, as of recently they were still at the faking EPS game (from a year ago):

"Autodesk, Inc. today announced a program to repurchase up to 30 million shares of the company's common stock"

http://www.businesswire.com/news/home/20160919005222/en/Auto...

So here's a company, bleeding red ink, whose balance sheet is badly eroding, sales are falling, and the people running the business are spending hundreds of millions of dollars to buy back massively over-inflated shares.

IMHO their product is nowadays REVIT (3DMax has fierce competition and is a lost battle). REVIT is a product that is still evolving and as such harder to copy/compete.

For example, if you build your costs for a $2.4 to $2.5 billion sales run-rate, generating $80m in net income, which is what they did for fiscal 2015. Then, you drop sales to $2 billion instead (which is now where they're at), while not reducing their operating expenses (which actually went up slightly), you get a big fat loss.

I'd attribute their mess to a wildly incompetent management and board, most of which should probably be thrown out of the company immediately. The crazy stock valuation is the sole thing keeping that from happening now; reality will catch up to that however as it almost always does. When the hammer does come down on the stock, activists will start shaking the company for changes.

The 30 million share repurchase program they proclaimed a little over a year ago, is equal to about a $3 billion cost in today's stock price. They're losing a lot of money, and they have $1.7 billion in cash in the bank, with a negative balance sheet. Then consider the zero growth for a decade and the poor prospects for turning that around near-term. Management & the board are doing something extraordinarily egregious and a large number of Autodesk employees are going to get hurt in the coming years most likely (very tragically). I can't see a scenario where Autodesk doesn't have to slash a further 1/4 to 1/3 of their staff in the next few years (they have to cut deep to get back to even on net income). When the bloom comes off this stock market bubble, their $109 stock will be a $20 or $30 stock if they don't quickly find a way to drive growth again.