Over the years since 2003, Henke Associates has issued quarterly Commentaries and WEEKLIES that dealt with high tech software vendors in the fields of Electronic Design Automation (EDA), Electronics Intellectual Property (Electronics IP), and in the companion fields of mechanical computer aided design (MCAD) and mechanical computer aided analysis (MCAE).
Familiar vendor names have included Cadence, Magma, Mentor Graphics, Synopsys and others in EDA; ARM Holdings, Rambus and others in Electronics IP; and Autodesk, Dassault Systemes, PTC and others in MCAD/MCAE. The vast majority of these articles (now nearing 100) have been separately posted on either EDACafe.com or MCADCafe.com, both specialty electronic newsletters among others issued daily by International Business Systems (IBSystems) of Campbell CA.
Beginning in 2011, the writer occasionally combined reports on EDA and on Electronics IP into one issue of EDA WEEKLY. Readers will recall for example the April 04, 2011 issue, entitled, “The EDA and the Electronics IP Almanac: Q4 2010.” The same combo also appeared on June 27, 2011 for Q1 2011 financials.
But as readers quickly observed in the August 22, 2011 EDA WEEKLY, the G5 Electronics IP financial results for Q2 2011 held the center stage alone, although the recent gyrations of the worldwide economic environment also received its due in coverage.
More rare have been occasions when one article appeared in both the EDACafe.com and MCADCafe.com newsletters, such as the article on ANSYS Multi-physics of last July 2010. This trend is likely to continue going forward as the fields of mechanical design automation & simulation merge more and more with electronics design & simulation.
Occasionally it will also become useful to combine the financial reports from EDA and MCAD/MCAE into one issue of EDA WEEKLY, when the stars line up schedule-wise. Such is the case here in September 2011; the writer will suggest simultaneous September 19 posting of this article in both the EDACafe.com and the MCADCafe.com newsletters.
Accordingly, this issue of the EDA WEEKLY, which is entitled, “ The EDA & MCAD/MCAE Almanac: Q2 2011, ” first posted on September 19, 2011, will report on the financial results for nominal Q2 2011 of the following sets of vendors:
Selection History of Vendor Coverage Choices for EDA
For the quarterly EDA Industry Commentaries published in EDACafe.com starting in May 2003, Henke Associates chose nine (9) publicly-traded entities: Altium, Ansoft, Cadence, Magma, Mentor Graphics, Nassda, Synopsys, Synplicity and Verisity.
Subsequently, Verisity and Nassda were acquired by EDA vendors Cadence and Synopsys, respectively, and hence were dropped from independent coverage the quarterly EDA Commentaries. More recently, EDA vendor Synplicity was acquired by Synopsys, and EDA vendor Ansoft was acquired by MCAE vendor ANSYS. Consequently, both Synplicity and Ansoft no longer independently appeared in the EDA Industry reports. Finally, in May 2011, SpringSoft, Inc. replaced Altium Limited on our G5 EDA list.
Selection History of Vendor Coverage Choices for MCAD/MCAE
In the very first MCAD Industry Commentary published in May 2003 in MCADCafé.com, then-recent yearly and quarterly financial performances of a selected group of nine (9) public Mechanical Computer Aided Design (MCAD) and Mechanical Computer Aided Engineering (MCAE) vendor companies were analyzed and compared. The entities initially covered were ANSYS, Autodesk, Dassault Systèmes, UGS PLM, ESI Group, Moldflow, MSC.Software, PTC and Tecnomatix.
As a result of the acquisition of Tecnomatix by UGS that closed April 1, 2005, Tecnomatix was eliminated from coverage thereafter as a separate entity. On May 7, 2007 UGS announced the close of its acquisition by Siemens AG effective May 4, 2007. Thereafter, the business went to market as UGS PLM Software (and later as Siemens PLM Software), a global division of the Siemens Automation and Drives (A&D) Group. Over the years UGS itself had bounced back and forth between being a public company and a private company under different ownerships. Regrettably, we have been able to gain very little insight into UGS' financial performance itself from public Siemens' corporate reports after the Siemens acquisition. Occasionally we will include Siemens PLM Software news items that bear on the industry as a whole. Then on June 25, 2008 Autodesk completed its acquisition of Moldflow Corporation, so thereafter Moldflow was eliminated from separate coverage.
On July 07, 2009 MSC.Software announced that it had entered into a definitive agreement with affiliates of Symphony Technology Group (STG) under which a company controlled by STG would acquire all of MSC's outstanding shares in a one-step cash merger transaction. This acquisition of MSC.Software by STG was finally consummated on October 14, 2009. No financial results for MSC.Software were published for Q3 2009, and none since. Unless and until such data are subsequently made available, MSC.Software has been dropped from financial reporting coverage herein, although occasionally MSC.Software news items that bear on the industry as a whole will be mentioned. Readers may be interested to see the recent MCAD/MCAE Commentary about a late August 2011 interview with CEO Dominic Gallello of MSC.Software at this URL:
Henke Associates recognizes that some MCAD/PLM/MCAE vendors have expanded their offerings into the world of “multi-physics” by moving beyond pure MCAD into other disciplines, such as fluid dynamics and electronic analysis (e.g. ANSYS). These Commentaries will also report on these new areas as appropriate. (The EDA WEEKLY article posted on EDACafe.com on July 19, 2010, entitled, “ANSYS turns 40!” dealt with ANSYS multi-physics, and it is available in the EDACafe.com EDA WEEKLY archives).
Structure of the presentation in this September 19, 2011 issue
The two Groups of vendors, five in EDA and five in MCAD/MCAE, will be reported separately herein. Each group will begin with summary charts of revenues and earnings, followed by individual financial summaries on each vendor in turn. Recent stock performances will also be included, and the current turmoil in the US and worldwide economies will also be mentioned when relevant using individual vendor three-month stock charts and Table 5 below.
Enjoy what you can!
EDA G5 Vendors’ Summary Results Nominal Q2 2011
As always, we begin our EDA review by looking at the Summary Revenue List of the most-recently-reported quarter; this time it’s the nominal Q2 2011 EDA G5 vendor performances (Table 1) below. Note that SpringSoft has been added to Table 1 for the second consecutive quarter, together with its revenue history stated in $US; for the second consecutive quarter, Altium has been removed from the G5 list for the time being; and all group totals have been updated accordingly.
Only two of the G5 EDA vendors ( Cadence and SpringSoft ) enjoyed nominal Q2 2011 sequential revenue totals greater than their respective Q1 2011 revenues. But their increased sequential revenues, like the other three vendors’ shortfalls, were only in single digit percentages. Indeed, the G5 Total for Q2 2011 only missed equaling the total G5 Q1 2011 sequential revenue figure by less than a percentage point (-0.84%).
Q2 2011’s total EDA G5 revenue ($938+ million) beat its year over year counterpart Q2 2010 total ($800+ million) by more than 17%! All G5 EDA vendors save Magma scored double-digit percentage revenue improvements YOY.
Mentor Graphics revenue fall from its brief visit to the $300 million revenue club in Q4 2010 continued into Q2 2011 with another drop to just north of $213 million. Its 7.1% decrease sequentially was the largest among the Big 3, and its 13.7% improvement over Q2 2010 the smallest among the Big 3.
Right now, Cadence is enjoying the smoothest quarter to quarter upward revenue slope among the EDA G5.
1 Notice that these Table 1 columns above calculate the percentages of one quarter over the other, as labeled, whereas in Table 2 below, the relevant columns provide the numerical dollar differences in earnings between two different quarters as labeled.
Turning to earnings in Table 2 below, we observe (a) that Cadence profit in Q2 2011 was up nicely over Q1 2011; (b) that Mentor Graphics managed some black ink in Q2 2011, despite its reduced revenue level; (c) that Magma fell back into red ink; (d) that SpringSoft delivered more profit than MGC on far lower revenue, and (e) that Synopsys delivered nearly 60% of the G5 Q2 2011 total profit, despite having no tax credit addition in Q2 2011 as it did in Q1 2011.
Indeed, the G5 total Q2 2011 earnings of over $87 million nearly equaled its Q1 2011 tax-inflated counterpart, and it exceeded Q2 2010 by a healthy $12.5 million, despite Cadence’s large profit in Q2 2010.
Of course, the actual financial performances of the EDA G5 in Q2 2011 reported herein, were, like those of their Electronics IP brothers reported on in the August 22, 2011 EDA WEEKLY, unable to mitigate the negative effects on G5 EDA stock prices and market caps, compared to the negative effects of the right wing’s ridiculous opposition in late-July–early-August to raising the US debt ceiling – leading to lower overall equity market gyrations for weeks afterward. See the comments in the Stock Prices and Market Caps section in the sequel (included as the final entry in this September 19, 2011 issue).
1 Notice that
Table 1 columns far above calculate the percentage of one quarter over the other, as labeled, whereas in
Table 2 just above, the relevant columns provide the numerical dollar differences in earnings between two different quarters as labeled.