Commentary: EDA Industry Update May 2006 -- What did the Last Quarter Bring?

Commentary: EDA Industry Update May 2006 -- What did the Last Quarter Bring?

by Dr. Russ Henke and Dr. Jack Horgan
Henke Associates

In May 2003, August 2003, December 2003, February 2004, May 2004, August 2004, December 2004, February 2005, May 2005, August 2005, November 2005 and February 2006 EDA Commentaries by the authors (published on, the then-current yearly and quarterly financial performances of a selected group of publicly traded Electronic Design Automation (EDA) companies were analyzed and compared. Expectations regarding the future financial performances of these same EDA entities were documented as well. The originally selected companies were Altium, Ansoft, Cadence, Magma, Mentor Graphics, Nassda, Synopsys, Synplicity and Verisity. .

Note: As part of continuing EDA industry consolidation, two previously-selected EDA vendors, namely Verisity and Nassda, have been acquired by others and hence have been dropped from the quarterly report.

This May 2006 report covers the performances of the remaining seven for the nominal First Quarter of 2006.

In this issue, EDA News Highlights are followed by the revenue & earnings performances of the selected group of EDA players for Q1 2006, and then EDA vendor by vendor details. EDA Vendor stock prices are discussed. Finally, individual EDA vendor forecasts for Q2 2006 are provided. Enjoy!

EDA News Highlights

On May 1, 2006 the Semiconductor Industry Association (SIA) reported that worldwide sales of semiconductors of $59.1 billion in the first quarter of 2006 were 7.3% higher than first quarter of 2005, when global sales were $55.1 billion. First-quarter sales declined slightly (by 1.3%) from the fourth quarter of 2005, when sales were $59.9 billion. The SIA said the sequential decline reflected normal seasonal patterns.

On May 16, 2006 Synopsys announced it is expanding its presence in ESL design by acquiring Virtio Corporation, creator of virtual platforms for embedded software development. The combination of Synopsys' System Studio solution with Virtio's virtual prototyping technology could help accelerate systems to market by giving software developers the ability to begin code development much earlier than with prevailing methods. The acquisition is also said to put Synopsys in a unique position to provide an integrated implementation, verification and IP solution to speed up hardware and software development.

How did the Seven EDA Vendors fair during the First Quarter of 2006?

As shown in Table 1, the combined revenue performance of the seven EDA vendors was $869 million, a healthy increase of 11.6% from the $780 million in the first quarter of 2005, but a decrease of 8% from the $946 million in the just prior quarter. Year-over-year, all the EDA firms reported Q1 revenue increases except for Synplicity, which experienced a slight dip. Magma sported the largest year-over-year percentage growth at 23%. All the others, save Mentor Graphics, enjoyed double-digit % growth. On a sequential basis, Ansoft led the pack with 26% growth. Magma and Synopsys also registered reasonable growth at 6.5% and 5.6%, respectively. All the other firms suffered sequential quarter double-digit % declines.

Figures 1 and 2 above provide additional revenue comparisons among vendors. In Q1 2006, Cadence was number one at 37%, Synopsys number two at 32%, and Mentor Graphics number three at 20%. The top three combined accounted for 89% of total revenue for the group of seven. Magma was a distant fourth at 5%.

Turning to earnings performances in Q1 2006, Table 2 shows that the EDA group of six (Altium did not report earnings) reported a combined net income of $24.5 million. This was a substantial increase from a combined net loss of $8.7 million a year earlier, but it represented a significant drop from the $44 million in the just prior quarter. Cadence and Synopsys had the largest $ earnings growth year-over-year. Magma and Mentor had net losses in the 2006 first quarter and also declined relative to the same quarter a year ago. On a sequential basis, Mentor had the largest decline going from a net gain of $15.4 million in Q4 2005 to a net loss of $5.8 million in Q1 2006. Mentor loss alone accounted for the group-of-seven's combined sequential quarterly decline. Ansoft and Cadence had good sequential earnings growth.

Company by Company Q1 2006 details:

On April 4, 2006 Altium Limited reported financial results for its third quarter of fiscal 2006, the period ended March 31, 2006. Revenue was $7.46 million in Q1 2006. This represents an increase of approximately 10% in on the results reported for the corresponding March quarter in the previous year, and a drop of 16% in US$ from the just prior quarter. The most notable results for the most recent quarter were in Altium's two largest markets, the United States and Europe, where sales were up 36% and 37%, respectively. However both territories had less revenue than the previous quarter.

Nick Martin, Founder and CEO, said, "Altium has delivered a solid finish to the quarter, with increased customer demand and strong sales growth in key regions for the third consecutive quarter. Based on these early signs of a sustained recovery and steady growth, we remain confident about the future. We are relentlessly continuing the hard work of the past six years to ensure we have the products, the infrastructure and the sales strategies in place to transform our technology leadership position into increased shareholder value over the longer term."

Table 3 below shows the revenue breakdown by geography in local currencies as reported by Altium.

On May 23, 2006 Ansoft Corporation reported impressive financial results for the fourth quarter of its fiscal year the period ended April 30, 2006. Total revenue for the quarter was $24.7 million, a 14% increase over the $21.7 million in the same quarter a year earlier and a 26% increase over the $19.7 million in the previous quarter. License revenue was $15.7 million, accounting for 63% of total revenue. This was a 9.4% increase year-over-year and a 39% increase sequentially. Service revenue was $9 million, accounting for 37% of total revenue. This was a 23% increase year-over-year and an 8% increase sequentially.

North American revenue accounted for 42% of total revenue, European revenue 16% and Asia Pacific revenue was also 42%. North American revenue increased 11.5%, European revenue 7.5% and Asia Pacific revenue increased 17%. On a percent of total revenue basis, North America and Europe were down one percent while Asia was up 2%. Revenue from EM was 17% of total revenue and revenue from High Performance was 83% of total revenue. The top three customers in the quarter were Intel, Fujitsu and Northrop Grumman.

For the fiscal year 2006, total revenue was $77 million, an increase of 14% from the $68 million in fiscal 2005. License revenue was $43 million, an increase of 9%. Service revenue was $34 million, an increase of 21%. Geographic and product segments for the year were very close to the percentage breakdown in the last quarter.

Net income for the quarter was $8.3 million. This was 75% more than the $4.7 million a year ago and a 94% increase form the $4.3 million in the just prior quarter. The results for the quarter included a $1.0 million income tax benefit associated with the reversal of the Company's remaining valuation allowance for certain U.S. Federal net deferred tax assets.

Nicholas Csendes, Ansoft's President and CEO, said, "We are pleased to report record revenue and earnings for the fourth quarter. For the next fiscal year, we anticipate continued revenue growth of around 10-15%."

1 | 2 | 3 | 4 | 5 | 6  Next Page »

Review Article Be the first to review this article

Featured Video
Senior Electrical Engineer for Allen & Shariff Corporation at Pittsburgh, Pennsylvania
Upcoming Events
Methodics User Group Meeting at Maxim Integrated 160 Rio Robles San Jose CA - Jun 5 - 6, 2018
2018 FLEX Korea at Room 402/ 403, COEX Seoul Korea (South) - Jun 20 - 21, 2018
IEEE 5G World FOrum at 5101 Great America Parkway Santa Clara CA - Jul 9 - 11, 2018
SEMICON West 2018 at Moscone Center San Francisco CA - Jul 10 - 12, 2018
TrueCircuits: IoTPLL

Internet Business Systems © 2018 Internet Business Systems, Inc.
25 North 14th Steet, Suite 710, San Jose, CA 95112
+1 (408) 882-6554 — Contact Us, or visit our other sites:
AECCafe - Architectural Design and Engineering TechJobsCafe - Technical Jobs and Resumes GISCafe - Geographical Information Services  MCADCafe - Mechanical Design and Engineering ShareCG - Share Computer Graphic (CG) Animation, 3D Art and 3D Models
  Privacy PolicyAdvertise