Commentary : EDA Industry Update March 2009 -- What did the Last Quarter Bring?


EDA Industry Update March 2009 -- What did the Last Quarter Bring?

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

In the May 2003 , December 2003 , February 2004 , August 2004 , December 2004 , February 2005 , May 2005 , August 2005 , December 2005 , February 2006 , May 2006 , August 2006 , December 2006 , February 2007 , May 2007 , August 2007 , November 2007 , March 2008, June 2008 , September 2008 and December 2008 EDA Commentaries by the authors (published on EDACafé.com), 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, had been acquired by others and hence were dropped from the authors' quarterly EDA Commentaries. More recently, EDA vendor Synplicity was acquired by EDA vendor Synopsys, and EDA vendor Ansoft was acquired by MCAE vendor ANSYS. Consequently, both Synplicity and Ansoft will no longer independently appear in these EDA Industry reports.

This March 2009 report covers the performances of the remaining five EDA vendors for the nominal Fourth Quarter and the Calendar Year of 2008. In this issue, EDA News Highlights are followed by the revenue & earnings performances of the selected group of EDA players for Q4 2008, and then EDA vendor by vendor details. This is followed by the revenue and earnings performances for the calendar year and then for five years. EDA Vendor stock prices are discussed. Finally, individual EDA vendor forecasts for Q1 2009 are provided. Enjoy!

Recent EDA Industry News Highlights:

On February 23, 2009 Tela Innovations announced it had acquired Blaze DFM, a supplier of technology to reduce power in advanced manufacturing process nodes. The acquisition brings Blaze DFM’s line of products and technologies, including Blaze MO™ power-optimization technology, into the Tela portfolio. Key engineering personnel from Blaze DFM will join Tela Innovations to enable continuity of product development and support of customers.

On February 22, 2009 SpringSoft announced that it had signed a definitive agreement to acquire all the outstanding shares of Certess, Inc., creators of the Certitude™ Functional Qualification solution. Certess employs 20 people primarily in France and the United States.

On February 2, 2009, the Semiconductor Industry Association (SIA) reported that global sales of semiconductors were severely impacted by the world-wide economic turmoil in 2008, resulting in the first year-on-year drop in sales since 2001. Total sales for 2008 were $248.6 billion compared to $255.6 billion in 2007, a decrease of 2.8%.

As with the US jobs situation, the end of 2008 was far worse for semiconductor sales than the beginning of 2008. Semiconductor sales fell from $22.3 billion in December 2007 to $17.4 billion in December 2008, a whopping decline of 22%. Also, December sales had declined by 16.6% from November 2008, when sales were $20.9 billion.

SIA President George Scalise said, “The global economic recession severely dampened semiconductor sales in the fourth quarter of 2008, historically a strong quarter for the industry. Weakening demand for the major drivers of semiconductor sales -- including automotive products, personal computers, cell phones, and corporate information technology products - resulted in a sharp drop in industry sales that affected nearly all product lines.”

Scalise added, “As consumers worldwide drive over 50% of demand for semiconductors, the fortunes of the chip industry are increasingly linked to macroeconomic conditions such as GDP, consumer confidence, and disposable income. Sales of electronic products held up reasonably well during the first nine months of 2008, but fell sharply as turmoil in the global financial industry unfolded.”

See more on the economic turmoil of 2008-09 toward the end of this COMMENTARY, where EDA stock prices are discussed.

How did the EDA Vendors fair during the Fourth Quarter of 2008?

As shown in Table 1, the combined revenue performance of the five covered EDA firms for the 2008 fourth quarter was $854 million, a major decrease of 24% from the $1,215 million in the fourth quarter of 2007, but a slight increase of 4.3% from the $819 million in the just prior 2008 third quarter. NOTE: The forecast for Q4 for the 5 covered vendors’ combined revenue was stated at minus 23% in the EDA Commentary of December 2008.

Cadence endured the steepest absolute quarterly revenue decline year-over-year at minus $230,608,000. Cadence also suffered the largest quarterly percentage revenue decline from last year at minus 50%, followed closely by Magma at minus 45%. Mentor also witnessed a year-over-year loss at minus 14.8%. On the other hand, Altium and Synopsys enjoyed Q4 growth over last year at plus 14.8% and plus 7.7%, respectively.

On a sequential basis, Mentor Graphics saw a percentage revenue increase of 31% and Altium over 12%. Magma suffered the largest revenue drop (minus 16%) from the just preceding quarter, but Cadence and Synopsys also reported small revenue dips relative to the prior quarter.

Figures 1 and 2 below provide additional quarterly revenue comparisons among vendors. In Q4 2008 Synopsys created the largest relative market share at 39%. At 28%, the traditionally third place finisher Mentor Graphics narrowly nudged out Cadence at 27% for the second spot (thereby regaining a temporary revenue lead over Cadence not seen since the early 90’s).

Turning warily to earnings performances in Q4 2008, Table 2 shows that the EDA group of 4 that reported quarterly income, delivered a reported combined loss of $1.633 million. (This monstrosity of a loss compares to a combined net gain of $195 million in the year ago quarter, and to a net loss of $226 million in the just previous quarter. The combined Q4 2008 loss of the 5 covered vendors was dominated by Cadence’s loss of $1.639 billion which included $1.316 billion in impairment of good will. Synopsys steady black ink and Mentor’s return to profit in Q4 2008 were no match against the massive Q4 red ink of Cadence and Magma. (In Magma’s significant Q4 loss of $78 million, again there was a $60.8 million goodwill impairment charge).

1 | 2 | 3 | 4 | 5  Next Page »


Review Article Be the first to review this article
Featured Video
Currently No Featured Jobs
Upcoming Events
SRTC-2018 at The Leela Ambience Gurugram NEW DELHI India - Jul 25 - 26, 2018
MPSoC Forum 2018 at The Cliff Lodge 9320 South Cliff Lodge Drive Snowbird UT - Jul 29 - 3, 2018
CDNLive China 2018 at Kerry Hotel Pudong, Shanghai 1388 Hua Mu Road, Pudong Shanghai China - Aug 10, 2018
CDNLive Taiwan 2018 at Ambassador Hotel Hsinchu Taiwan - Aug 14, 2018

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