Did you know that designers for the last 17 Academy Award winners for Best Visual Effects used Autodesk (ADSK) software?

Since its introduction of AutoCAD in 1982, Autodesk continues to develop the broadest portfolio of state-of-the-art 3D software for the architecture/engineering/construction (AEC), manufacturing, and media & entertainment markets worldwide. These customers use Autodesk software to design, visualize, and simulate their ideas before they're ever built or created.

But the shifting sands of technology -- both the company's and customers' access to it -- have been creating some headwinds for this pioneer.

Two weeks ago, Autodesk (ADSK) reported fiscal second-quarter 2014 non-GAAP earnings that beat consensus. But the reaction among investors and analysts since has been mixed and the stock recently fell to a Zacks #5 Rank Strong Sell due to steeply falling EPS estimates, as the following chart displays...

A Change to the Business Model

While Autodesk's competitors sell advanced software for upwards of $10,000, AutoCAD sells for only about $4,000, maintaining its foothold as the de facto standard with 85% market share. The software's price means AutoCAD is the only option for smaller firms -- a market the company's competitors have only recently begun to target as we will see in a moment.

Autodesk has grown revenues since the recession by convincing customers to switch to a subscription model for AutoCAD software. In this model, customers get automatic updates and new features in exchange for a recurring fee. The model is much more profitable for Autodesk -- only 22% of Autodesk's customers buy software in this way, but they account for nearly half of the revenues.

But this transition was recently modified to include a move to offer more rental and usage-based pricing options. And this gave the company a lack of financial visibility, causing them to withdraw revenue and profit guidance for the next several quarters -- which of course left analysts no choice but to take their estimates down.

The news isn't all bad. It's really about how the company is altering strategy and responding to the shifting sands of technology, customer needs, and the competition.

According to WikiInvest, 'Autodesk is trying to increase the adoption of 'next generation' 3D software products as compared to the 2D market. It recognizes that the 3-D segment would be a key driver for growth for the company in the future. This would definitely provide Autodesk with the opportunity to up-sell its massive 2-D installed base into higher average sales price (ASP) 3-D software and to boost growth.'