Commentary: EDA Industry Update June 2008 -- What did the Last Quarter Bring?


With the two EDA vendors Ansoft and Synplicity having been acquired recently, the EDA Industry authors would welcome suggestions for new additions. To be eligible, a firm must be first an EDA company, secondly be a public company, and thirdly be a firm that publicly reports its financial data in a timely fashion.




How did the covered EDA Vendors fair during the First Quarter of 2008?

As shown in Table 1, the combined revenue performance of seven EDA vendors for Q1 2008 was $911 million, a decrease of 4.7% from the $956 million in the year ago quarter, and a drop of 22% from the $1,172 million in the just previous quarter.

Synplicity and Altium had year-over-year revenue increases in excess of 20% with Ansoft close behind at almost 19%. Magma and Mentor Graphics had revenue growth just over 10%. Cadence was the only decliner at -21%.

On a sequential basis, Ansoft was the growth leader by far at 30%. Altium and Synopsys reported modest growth. Both Cadence and Mentor dropped about 37% from their strong fourth quarters.

Figures 1 and 2 above provide additional revenue comparisons among vendors. Reversing recent roles, Synopsys was number one in Q1 2008 at 35%, with Cadence a close number 2 at 32%. Mentor continued in third place at 20%. Magma was a distant fourth at 6%.

Turning to earnings performances in Q1 2008, Table 2 shows that the EDA group of six (Altium did not report earnings) reported a combined net loss of $7.4 million compared to net income of $70 million in the same first quarter last year and compared to net income of $212 million in the just previous quarter. Synopsys and Ansoft were the only EDA vendors that delivered net income in Q1 2008. Both Cadence and Mentor Graphics reported substantial losses in Q1 2008 and significant swings from both the year ago quarter and from the just previous quarter. Magma's loss in the first quarter this year was nevertheless a considerable year-over-year improvement.


Company by Company Q1 2008 details:
On April 3, 2008 Altium Limited reported financial results for its third fiscal quarter, the period ended March 31, 2008. Total revenue was AU$13.31 million, an increase of 9% over the equivalent period a year ago; in US dollars, revenue of US$12.11 million, an increase of 25% over the equivalent period a year ago. Sales were AU$13.72 million, an increase of 6% over the equivalent period a year ago; in US dollars, sales of US$12.48 million, an increase of 23% over the equivalent period a year ago.

All regions saw growth in sales for the fiscal period, measured in local currencies. Sales grew by 16% in the Americas (US$); by 21% in Europe (€); by 55% in China (US$) and by 2% in APAC excluding China (US$). Sales in consulting services in Europe fell 26% (measured in euros) as part of a continuing and planned reduction in these services. Altium reports geographic information in dollars or euros. Table 3 below shows the results in US dollars.





On May 29, 2008 Ansoft Corporation announced financial results for its fourth fiscal quarter and its entire fiscal year 2008, the periods ended April 30, 2008. Total revenue for the quarter was $33.9 million, an increase of nearly 19% from the $28.6 million in the forth quarter of fiscal 2007, and an increase of almost 30% from the $21.1 million in the just prior quarter. License revenue was $22.7 million, accounting for 67% of total revenue. Service and other revenue was $11.2 million, 33% of total revenue, an increase of 14.5% year-over-year and an increase of nearly 1% sequentially.

Net income for the quarter was $8.5 million, or 25% of revenue. The $8.5 million was an increase of just over 7% from the $7.9 million in the year ago quarter, and an increase of 31% from $6.5 million in the previous quarter. Current quarter results include $1.7 million in merger-related expenses. (See details of the acquisition of Ansoft by ANSYS in the News Highlights section of this EDA Industry Commentary above).

Total revenue for the entire fiscal 2008 was $103 million, a healthy 16% increase from the $89 million in fiscal 2007. License revenue was nearly $60 million, or 58% of total revenue. This figure was up 17% from the prior year. Service and other revenue was $43.6 million, a 14.4% increase from fiscal 2007. Net income for the year was $24.1 million, a 19% increase from the $20.2 million in the previous year.

Nicholas Csendes, Ansoft's president and CEO, said, "We experienced revenue growth in both domestic and international markets and in both product lines. We are pleased to have had such a strong finish to our fiscal year with nearly 20% growth in revenue during the fourth quarter."

Csendes noted, "On March 31, 2008, we announced that Ansoft and ANSYS had signed a definitive agreement for ANSYS to acquire Ansoft. We believe there are strong synergies between the two companies and are very excited about the combination. In light of the proposed transaction, we will not be providing guidance for future periods."

In light of the press release issued on March 31, 2008, announcing the signing of a definitive agreement relating to the acquisition of Ansoft Corporation by ANSYS Inc., there was no conference call to discuss the results of the fourth fiscal quarter of 2008.


On April 23, 2008 Cadence Design Systems, Inc. reported on financial results of the first quarter, the period ended March 31, 2008. Total revenue for the first quarter was $287 million, a decrease of 21.4% from the $365 million in the first quarter of 2007 and a decrease of 37.3% from the $458 million in the fourth quarter of 2007. The $287 million was toward the high end of the revenue guidance given last quarter. Product revenue was $156 million, or 54% of total revenue. This was a year-over-year decrease of 34%, and a 52% decrease sequentially. Maintenance revenue was $98.8 million, accounting for 11% of total revenue. This was an increase of 3.6% year-over-year, and a sequential decrease of nearly 1%. Services revenue of $32 million accounted for the remaining 11% of total revenue. Service revenue was up almost 1% year-over-year, and 7.8% sequentially.

Revenue from North America accounted for 40% of total revenue, revenue from Europe for 22%, revenue from Japan 26% and revenue from the rest of Asia for 12%. Revenue from North America was down 34%, revenue from Japan was down 24% and revenue from the rest of Asia was down 5.6%. By contrast revenue from Europe was up 15%.

In terms of functional areas, Functional Verification accounted for 20% of total revenue, Digital IC Design for 27%, Custom IC for 25%, DFM for 6%, System Integration for 11% and Services for 11%. One customer accounted for approximately 11% of total revenue.


On March 11, 2008 Cadence announced that it had acquired Chip Estimate Corporation, said to be a leader in delivering IC planning and enterprise-level IP reuse management solutions. Founded in 2003, Chip Estimate's products enable electronics design teams to predict the die size, yield, power consumption, performance, and cost of chips based on almost any design architecture, IP and silicon process node options.

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Rating:
Reviews:
Review Article
  • October 09, 2008
    Reviewed by 'Wieslaw Paprocki'
    Sirs,
    Something went wrong with:
    "As shown in Table 1, the combined revenue performance of seven EDA vendors was $911 million, a double-digit increase of 10.7% from the $956 million in the year ago quarter,".
    As far as I understand the maths this is rather 5% DECREASE....
    Regards,
    Wieslaw Paprocki
    Alt-S, France

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  • October 09, 2008
    Reviewed by 'Wieslaw'
    Sirs,
    Logic Vision???("...Logic Vision [WP:should be Magma] and Synopsys also had significant declines at 20% and 15%, respectively.")
    Regards,
    Wieslaw

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  • October 09, 2008
    Reviewed by 'Russ Henke & Jack Horgan'
    The EDA Commentary authors wish to thank Mr. Weislaw Paprocki of Alt-S France for catching the two data and text errors on 29 July 2008, and we have corrected them as of 07 August in the currently-posted Q1 2008 EDA Industry Commentary.

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