On April 26, 2006 Cadence Design Systems, Inc. reported results for the first quarter, the period ended March 31, 2006. Total revenue for the quarter was $328 million, an increase of 12% over the $292 million in the first quarter of 2005, but a decrease of 13% from the $378 million in the fourth quarter of 2005. Product revenue was $208 million, accounting for 63% of total revenue. This was an increase of 20% year-over-year, but a decrease of 19% sequentially. Maintenance revenue was $88 million, accounting for 27% of total revenue. This was an increase of 1.1% year-over-year and a decrease of 0.4% sequentially. Service revenue was $32 million, accounting for 10% of total revenue. This was flat year-over-year and deceased less than 1% sequentially.
Table 4 below presents the breakdown by product segment. The original data provided by Cadence was in terms of percentages of total revenue. Functional Verification and Custom IC Design had solid growth year-over-year. Sequentially, only Custom IC Design and System Interconnect experienced growth. For the quarter, Function Verification accounted for 26% of total revenue, Digital IC Design 20% and Custom IC Design for 27%.
On a geographic basis, North America accounted for 51% of total revenue, Europe 19%, Japan 21% and Asia 9%. On a year-over-year basis, NA was up 24%, Europe up 33%, Japan down 22% and Asia up 26%. All but NA (which grew 5%) had double-digit % declines sequentially.
For the quarter Cadence reported net income of $21.8 million, way up from the $1 million in the same quarter a year ago, but down 18% from the $26.6 million in the just prior quarter. In the first 2006 quarter, Cadence enjpyed $25 million in net other income versus $4.5 million a year earlier, and $3.7 million in the previous quarter. This quarter's charges were $30 million in stock based compensation (versus $0 a year earlier) and restructuring of $0.5 million (versus $17.5 million).
Mike Fister, president and CEO of Cadence Design Systems, Inc., said, "Consumer electronics, wireless and networking are driving the market. All of these require our customers to rapidly develop analog mixed-signal and system validation expertise. The performance of our custom IC and verification businesses this quarter clearly demonstrates our market leadership."
Bill Porter, executive vice president and chief financial officer, added, "We had a good quarter across all geographies, especially in Japan, and we continued to make progress on our objectives to demonstrate growth, execute consistently and achieve our operating targets."
On April 27, 2006 Magma Design Automation Inc. reported record results for its fourth quarter and fiscal year 2006, the period ended April 2, 2006. Total revenue for the quarter was $44 million, an increase of 23.3% over the $35.7 million reported for the year-ago quarter, and an increase of 6.5% over the $41.3 million in the just previous quarter. License revenue was $37.8 million, accounting for 86% of total revenue. This was a 25% increase year-over-year and a 8% increase sequentially. Services revenue was $6.3 million accounting, for 14% of total revenue. This was an increase of 13% year-over-year, but a 2.7% decrease sequentially. Backlog accounted for 64% of total revenue. North American revenue accounted for 70% of total revenue and increased roughly 50% both year-over-year and sequentially. Europe accounted for 8% of total revenue, Japan 8% and Asia Pacific 14%. European revenue fell 41% year-over-year and 77% sequentially.
Net loss for the most recent quarter was $6.2 million, compared to net losses of $5.6 million and $6.6 million a year ago and a quarter ago, respectively.
For the fiscal year Magma reported revenue of $164 million, an increase of 12% from the $146 million in fiscal 2005. License revenue was $139 million, accounting for 85% of total revenue and up 12%. Services revenue was $24.8 million, accounting for 15% of total revenue and up 13%.
Net loss of the year was $21 million, compared to a net loss of $8.6 million in fiscal 2005. G&A expense for fiscal 2006 was $20 million more than fiscal 2005. Litigation expense accounted for $16 million in fiscal 2006.
On April 27, 2006 Magma announced it has appointed Pete Teshima as the company's new chief financial officer. Teshima, who has served as the company's vice president, finance since joining Magma in 2004, will report to President and Chief Operating Officer Roy E. Jewell.
On April 17, 2006 Magma unveiled Talus, an all-new IC implementation product line. The Talus LX and Talus PX products are said to provide the foundation of the Automated Chip Creation methodology for logic and physical design engineers. Both are built on Magma's unified data model architecture. Talus LX synthesizes chip RTL for given timing, power and placement constraints and automatically generates physical partitions and power and clock prototypes. Talus PX provides complete physical implementation of the design including near abutment layout, final physical partitions, power and signal routing, and chip-level clock tree synthesis. Both products are currently in limited release.
On May 24, 2006 Magma announced it had repurchased, in privately negotiated transactions, $40.3 million face amount (or approximately 38% of the total) of the company's zero coupon convertible subordinated notes due May 2008 at an average discount to face value of 13.25%. Magma spent an aggregate of approximately $35.0 million on the repurchases. The resulting net pre-tax gain of approximately $4.8 million from the repurchase of the convertible subordinated notes will be reported in Magma's GAAP financial statements for the first quarter of fiscal 2007.
Rajeev Madhavan, chairman and CEO of Magma, said, "We made significant accomplishments in the fourth quarter and fiscal 2006 as a whole. We achieved record revenue in each of the last four quarters and all key financial metrics finished within or above our target ranges. More and more customers are finding Magma to be the best software for designing large, complex and high-performance designs, and many have expressed a great deal of early interest in our recently announced Talus product line. We enter fiscal 2007 with a great deal of momentum."
On April 26, 2006 Mentor Graphics Corporation announced its financial results for the first quarter of 2006, the period ended March 31, 2006. Total revenue for the quarter was $176 million, an increase of over 7% from the $164 million in the same quarter last year, but a decrease of 20% from the $221 million in the fourth quarter of 2005. Revenue from Systems and Software was $102 million, accounting for 58% of total revenue. This was an increase of 12% year-over-year but a decrease of 29% sequentially. Revenue from Service and Support was $73 million accounting, for 42% of total revenue. This was an increase of less than 1% year-over-year and a decrease of almost 3% sequentially.
The year-over-year increase in Systems and Software was due primarily to strength in IC Design to Silicon and Integrated System Design, partially offset by weakness in Emulation product revenues. Revenue strength in IC Design to Silicon was led by Calibre RET (Resolution Enhancement Technology). Revenue strength in Integrated Systems Design was primarily concentrated in the Company's Board Station product line (way to go, guys!). The increase in revenue was partially offset by an unfavorable currency impact of approximately 3% due to the strengthening of the dollar for the period.
In the quarter revenue from the Americas accounted for 36% of total revenue, revenue from Europe 28%, from Japan 22% and from Pac Rim 14%.
Compared to the first quarter of 2005, bookings grew nearly 250% in IC Design to Silicon and 20% in Scalable Verification, while Integrated Systems Design was flat and New and Emerging was down 15%. Strength in IC Design to Silicon was driven by the production rollouts of 65nm processes, as well as 45nm prototyping, with significant purchases of Calibre DFM products.
Net loss for the quarter was $5.8 million, compared to a net loss of $4.4 million a year earlier, and a net gain of $15 million in the just prior quarter. In the last quarter, there was a $5.2 million tax benefit that was cancelled out by $5.2 million in special charges.
Walden C. Rhines, chairman and CEO of Mentor Graphics, said, "Results in the first quarter were driven by customer ramp-up of advanced semiconductor designs at 90nm and 65nm, plus initial prototyping at 45nm. Semiconductor companies are expanding leading-edge capacity, which is good news, especially for Calibre® design-for-manufacturing products. Customer adoption of new products was evident in the quarter, as two-thirds of the value of our top ten orders was from the addition of new products to existing contracts."