Walden C. Rhines, chairman and CEO of Mentor Graphics, said, “In a difficult environment, the company performed as we forecast. Our investments in new technologies and markets continue to pay dividends, with growth in analog/mixed-signal design, electronic system level (ESL) design, automotive and design-for-test, among others.”
On May 21, 2008 Synopsys, Inc. announced financial results for its second quarter of its fiscal 2008, the period ended April 30, 2008. Total revenue for the quarter was $324 million, an increase of nearly 11% from the $293 million in the same quarter a year ago, and an increase of almost 3% from the $315 million in the prior quarter. The $324 million was at the high end of the guidance given last quarter. Time-based license revenue at $278 million accounted for 86% of total revenue. This was an increase of 14% from the year ago quarter, and an increase of 3.9% from the previous quarter. Upfront license revenue was $12.2 million, or 3.8% of total revenue. This was down 14.4% year-over-year, and down 2.5% sequentially. Maintenance and service revenue was $34 million, accounting for 10.5% of total revenue. This was a drop of about 3% both year-over-year and sequentially.
North American revenue was 48% of total revenue, European revenue 14%, Japan 23% and Asia Pacific 15%. North American revenue was up 6.8% year-over-year, but essentially flat sequentially. European revenue was up 8.2% year-over-year, but declined 1% sequentially. Revenue from Japan was up 74% from the prior year, and up 53% from the prior quarter. AP revenue was up 7.7% year-over-year, and 4.6% sequentially. One customer accounted for slightly more than 10% of the quarter's revenue.
Core EDA revenue accounted for 75% of total revenue, IP and Systems for 7.3%, DFM for 12% and Services for 5.5%.
Net income for the quarter was $39.3 million, a drop of 4.6% from the same quarter last year, and a drop of 15% sequentially.
Aart de Geus, chairman and CEO of Synopsys, said, “Synopsys continues to deliver predictable revenue growth and solid earnings expansion. We are seeing good momentum as our leading technology, comprehensive solutions and strong field support make us a long-term, reliable partner to our customers."
Commenting on the Synplicity acquisition Aart de Geus said, “Finally, last week we closed our acquisition of Synplicity, which is very positive from at least four angles: One, we're being joined by a very capable technical team; Two, Synplicity is a clear leader in the directly adjacent FPGA design area; Three, Synplicity brings an opportunity to cross-sell products to each other's customer base; And last, but certainly not least, Simplicity's growing rapid prototyping business will allow us to put increased emphasis on the embedded software market segment.
On April 22, 2008 Synplicity, Inc announced financial results for the first quarter, the period ended March 31, 2008. Total revenue for the quarter was $18.6 million, an almost 25% increase over the same period a year ago, but a 7.4% decline from the prior quarter. The $18.6 million was just above the revenue guidance range given last quarter. License revenue was $8.1 million, accounting for 44% of total revenue. This was a jump of 109% from the first quarter of 2007, but a 9.5% decline from the last quarter. Maintenance revenue was $7.2 million, or 39% of total revenue. This was an increase of 8.2% year-over-year, and a drop of 3.5% sequentially. Bundle Service revenue was $3.3 million, or 18% of total revenue. This was a drop of 25% year-over-year, and a drop of 10% sequentially.
Net loss for the quarter was $1.86 million, compared to net income of $654,000 in the same quarter of 2007, and compared to net income of $10.3 million in the fourth quarter of 2007. GAAP net loss included $1.4 million in expenses related to the pending merger of Synplicity and Synopsys, Inc, $849,000 in amortization of intangible assets and $809,000 of stock-based compensation expense. For the quarter ended March 31, 2007, GAAP net income included $248,000 in amortization of intangible assets and $879,000 of stock-based compensation expense.
Gary Meyers, president and CEO of Synplicity, said, “We are pleased to report that revenue in the first quarter of 2008 came in ahead of our expectations. Our ConfirmaTM product line for ASIC verification again showed substantial year over year revenue growth. Our unique combination of hardware, software and global support organization is driving market share gains in this important segment.”
EDA Vendor Stock Performance
As shown in Tables 8 and 9 and Figure 3 below, the combined stock prices for the EDA vendors unfavorably decreased in absolute terms almost 22% year-over-year compared to a decrease of only 4.5% for the major stock indexes year-over-year. Oddly, the combined stock prices for the EDA vendors favorably decreased in absolute terms only 1.1% sequentially, compared to a decrease of 10.5% for the major stock indexes sequentially. (The average percentage EDA change was down 25.7% year-over-year and decreased 6.0% sequentially).
On a year-over-year basis only Synplicity (+12%) increased its stock price. Altium, Cadence and Mentor Graphics saw stock price declines around 50%. Magma and Synopsys also had significant declines at 20% and 15% respectively. On a sequential basis Synplicity stock rose 35% followed by Ansoft at 18%. Cadence was a distant third at +5.2%. Altium suffered the largest stock price decline at -48%. Magma and Mentor Graphics had price declines in the neighborhood of 20%.
As the current recession in the US deepens, EDA vendors may well continue to suffer stock market troubles, if not flatter revenues and earnings going forward. US economic data are not improving during Q2 2008.
In a new US corporate IT spending survey by ChangeWave Research in April 2008, 25% of the respondents said their company will spend less on software in coming months. This figure is 3 points higher than a study ChangeWave conducted in January and 11 points higher than one completed in October 2007, indicating a deepening trend.
Consumer prices increased a hefty 0.6% in April 2008, the US Labor Department said on May 15, 2008, if you take out seasonal adjustments. Of course, if one does not eat or drive (i.e. ignoring price increases in food and gas), April consumer prices increased only 0.2%. During the last 12 months, overall US consumer prices increased 3.9%. Food alone has risen 5.1%; gasoline has risen 20.7%.
The US government also reported that oil imported in April 2008 cost 67% more than oil imported a year earlier - but the trend in import prices is clear even if energy prices are ignored. For all non-petroleum imports, prices in April were up 6.2% from a year earlier. That is the fastest rate of gain in almost 20 years.
According to the May 16, 2008 Wall Street Journal, "US economic reports released May 15 are keeping recession worries afloat, showing continued weakness in the labor market and a struggling manufacturing sector." The US Federal Reserve announced on May 15 that "US industrial production plunged a sharp 0.7% in April 2008, as output of motor vehicles and parts plummeted 8.2%." US industrial production had risen 0.2% percent in March 2008, but also dropped 0.7% percent in February.
The Reuters/University of Michigan index of US consumer confidence dropped to 59.5 in May 2008 - the lowest level since June 1980.
The president of Alliance for Excellent Education, in a new book, “Raising the Grade: How High School Reform Can Save Our Youth and Our Nation”, stated the following: “We can't even keep our (US) kids in school. A third of them drop out. Half of those who remain go on to graduate without the skills for college or a decent job. International comparisons rank the United States a stunningly unimpressive eighteenth for high school graduation rates, a lackluster ranking of fifteenth for high school reading assessments among 15-year-olds in developed countries, and an embarrassing 25th for high school math.”