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

In addition to its chip planning technology, Chip Estimate has developed the Internet portal,, which hosts collaborative partnerships of over 175 IP suppliers and foundries featuring over 6,000 IP components.

Cadence also announced the appointments of Bill Porter as Chief Administrative Officer and Kevin Palatnik, a twelve-year veteran of Cadence, as Chief Financial Officer. Porter joined Cadence in 1994 and became CFO in 1999. As executive vice president and CAO, Porter will oversee Finance, Treasury, Legal, Human Resources, and Business Development as well as Corporate Marketing and Strategy. Palatnik has served as controller for the past two years. He has held a number of senior financial and operational positions, including corporate vice president, finance and operations, and corporate vice president, Technical Field Operations.

Net loss for the quarter was $18.7 million, compared to net gain of $44 million in the year ago quarter, and a gain of $120 million in the just prior quarter. Total costs and expenses for the recent quarter were $4 million less than the year ago quarter, but in that year-ago quarter, other income was more by about $14 million.

Bill Porter, executive vice president and chief administrative officer, said, “First quarter results met our expectations and we'll continue to focus on improving our operating performance throughout the year.”

On May 1, 2008 Magma Design Automation Inc announced the financial results for its fourth fiscal quarter and the full year of its fiscal 2008. Total revenue for the quarter was $55 million, an increase of 10.3% from the $49.9 million in the same quarter last year, and a slight decrease of 1.3% from the $55.7 million in the previous quarter. The $55 million was just below the revenue guidance range given last quarter. License revenue of $35.8 million, accounting for 65% of total revenue, was an increase of 15.7% year-over-year, and an increase of 0.6% sequentially. Service revenue was $8.8 million, accounting for 16% of total revenue. This was an increase of 6.9% year-over-year, and a decrease of 0.2% sequentially. Bundled software and service revenue was $10.3 million, or 19% of total revenue. This was down 2.7% year-over-year, and down 8.2% sequentially. In the quarter, 82% of revenue came from backlog-related transactions and 18% came from upfront orders completed in the quarter. This is the same mix Magma had in the prior quarter.

In the quarter, North America accounted for 63% of total revenue, Europe for 9.4%, Japan for 12.5% and the rest of Asia Pacific 15%. On a sequential basis, North America was down 6.6%, Europe down 20%, Japan down 1.1% but the Rest of AP was up 59%.

February 27, 2008 was a busy day for Magma Design Automation. They announced they had acquired Sabio Labs; introduced Titan full-chip mixed-signal design, analysis and verification platform; and launched QuickCap TLx, adding advanced transistor-level extraction support to its gold-standard 3D capacitance extractor.

Net loss for the recent quarter was $7.3 million, a considerable improvement over the loss of $24.5 million in the year ago quarter, but a larger loss than the $5.9 million loss in the previous quarter. In the year ago quarter, there were litigation expenses of $14.4 million and relocation expenses of $1.8 million.

On April 30, 2008 Magma announced that Bruce Eastman had joined the company as corporate vice president, Worldwide Sales. Eastman will report to Roy E. Jewell, Magma president and chief operating officer. Eastman's EDA career began in sales management with ECAD, through that company's initial public offering and eventual merger with SDA to form Cadence Design Systems. While at Cadence, he served as vice president of Worldwide Major Accounts and Technology Partners. He later served as vice president of North America Sales for Quickturn Systems through its IPO, and as vice president of Sales for Avant!.

Total Magma revenue for fiscal 2008 was $214 million, a 20% increase over the $178 million in the prior fiscal year, and a record for Magma. License revenue was $139 million, or 65% of total revenue, an increase of 36%. Services revenue was $35 million, or 16% of total revenue, an increase of 5%. Revenue from bundled software and services was $40.5 million, accounting for 19% of total revenue. This was a decline of 5.6% versus the prior year. Backlog at the end of the year, which will be reported in Form 10-K in mid-June, was greater than $390 million. This represented a decline from the backlog at the end of fiscal 2007, which was reported at greater than $420 million. Net loss for the entire fiscal 2008 was $30.9 million, compared to a new loss of $61.1 million in the prior year.

For fiscal 2008, North America revenue accounted for 59.5%, Europe for 12.4%, Japan for 16.4% and the rest of Asia Pacific for 11.7%. North America was up 5%, Europe up 36.5%, Japan up 59% and Rest of AP up 68%.

Rajeev Madhavan, chairman and CEO of Magma, said, "We reached major market and financial milestones this year. Revenue grew more than 20 percent, new products established greater traction, and products released toward the end of the year were well received."

Madhavan further said, “We finished fiscal 2008 with record revenue of $214.4 million, breaking the $200 million threshold for the first time in Magma's history. Fourth quarter revenue of $55 million was slightly below target as some orders were pushed out, but by and large we again put up solid numbers. EPS and operating margin were both within our guidance ranges.”

“Some competitors have expressed concern over the economic conditions our customers face, but many of our customers are actually doing well, some very well. But while these companies are not seeing broad-based weakness in their businesses, some are experiencing near-term softness and lack of visibility. They are therefore exercising heightened caution in making purchase decisions and paying attention to near-term financial metrics. Specifically, our revenues shortfall this quarter was due to a stringent expense controls at a particular customer that resulted in a decision on the last day of the quarter to delay an expected order. This order was not canceled and is in process as we speak.”

On May 27, 2008 Mentor Graphics reported its financial results for the first quarter of its fiscal 2009, the period ended April 30, 2008. Total revenue for the quarter was $179 million, a drop of almost 8% from the $194 million in the same quarter a year earlier and a drop of 37% from $284 million in the historically strong fourth quarter. The recent $179 million in the quarter's revenue was above the guidance of $170 million given in the last quarter. System and software revenue was $96.8 million, or 54% of total revenue, a decline of 17.8% year-over-year, and a decline of 52% sequentially. Service and support revenue was $82.4 million, or 46% of total revenue, an increase of 7.5% year-over-year and a drop of 1.6% from the prior quarter.

In the quarter, America accounted for 40% of total revenue, the same percentage in the previous quarter, but down from 50% a year earlier. Europe accounted for 30% of total revenue, Japan for 20% and Pacific Rim for 10%.

Revenue by product area was 20% Integrated System Design, 40% IC Design2Silicon, 20% Scalable Verification, 10% New & Emerging and 10% Services. This was the same percentage breakdown as a year ago.

Net loss for the quarter was $27.5 million, compared to net incomes of $290,000 and $35.7 million in the year ago quarter and in the just previous quarter, respectively.

As reported in the News Highlights section in the foregoing, on May 15, 2008 Mentor announced that it had acquired the assets of Ponte Solutions, Inc., the Mountain View, CA developer of model-based DFM solutions that analyze, predict, and reduce the impact of process variability during the manufacture and design of semiconductors. Terms of the transaction were not disclosed.

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Review Article
  • October 09, 2008
    Reviewed by 'Wieslaw Paprocki'
    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....
    Wieslaw Paprocki
    Alt-S, France

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

      Was this review helpful to you?   (Report this review as inappropriate)

  • 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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