EDA Industry Update February 2006 -- What did the Last Quarter Bring?

In May 2003, August 2003, December 2003, February 2004, May 2004, August 2004, December 2004, February 2005, May 2005, August 2005 and November 2005 EDA Commentaries by the authors (published on EDACafe.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 selected companies were Altium, Ansoft, Cadence, Magma, Mentor Graphics, Nassda, Synopsys, Synplicity and Verisity.

This February 2006 report covers their performances for the nominal Fourth Quarter 2005 and calendar 2005

In this issue, EDA News Highlights are followed by the revenue & earnings performances of the selected group of EDA players for Q4 2005, and then EDA vendor by vendor details. This is followed by the revenue & earnings performance for the calendar year 2005. EDA Vendor stock prices are discussed. Finally, individual EDA vendor forecasts for Q1 2006 are provided. Enjoy!

Note: As part of continuing EDA industry consolidation, two previously-selected EDA vendors, namely Verisity and Nassda, have been acquired by others and hence these two entities have been dropped from this quarterly report.



EDA News Highlights

According to the Semiconductor Industry Association (SIA), worldwide sales of semiconductors set a new record at $227.5 billion in 2005, an increase of 6.8% from the $213.0 billion reported in 2004. Worldwide sales for the fourth quarter were $59.86 billion, up by 2.0% from third-quarter sales of $58.67 billion, and up by 8.6% from sales of $55.10 billion in the fourth quarter of 2004. SIA forecasts that worldwide sales of semiconductors will grow by 7.9% in 2006, to $245 billion.

SIA President George Scalise noted that the semiconductor sales data reflect the continuing shift of electronics manufacturing operations to the Asia-Pacific region in general and to China in particular. He said, "Sales of semiconductors in the Asia-Pacific region reached $9.3 billion in December 2005 -- a 20% increase from December 2004. This region represented 46.6% of the global market for microchips at year's end. The largest share of the market is in China, which has become the world's leading manufacturer of electronics products."

According to industry analyst firm Gartner, worldwide semiconductor revenue is forecast to reach $257.7 billion in 2006, a 9.5% increase from 2005 revenue of $235.3 billion. In 2005, the market grew 7%. So Gartner's figures are slightly higher than the SIA's. Gartner expects a mild slowdown in 2007 with growth of 7%, followed by a cyclical market peak in 2008.

Andrew Norwood, research vice president for Gartner's semiconductor research group, said, "The supply of semiconductor devices is becoming more constrained, and the downward pressure on the average selling prices of devices seen in 2005 has eased. Any lengthening of device lead-times in coming months will be seen as further evidence of a tightening market."



How did the EDA Vendors fair during the Fourth Quarter of 2005?

As shown in Table 1, the combined revenue performance of seven EDA vendors was $946 million, a not-insignificant 8% increase over the $877 million in the fourth quarter of 2004 and a 13.5% increase over the $833 million achieved in the third quarter of 2005. All the EDA vendors covered here had increased revenue year-over-year. Mentor Graphics exhibited the smallest year-over-year growth at just under 3%. Also, Synopsys and Synplicity were under 8% growth year-over-year. The remaining four firms grew over 10%, including Cadence.


Figures 1 and 2 above provide additional revenue comparisons among vendors. Cadence has the largest market share at 40.0% followed by Synopsys at 27.5% and Mentor Grsphics at 23.4%. Not surprisingly, the big three combined for 90.5% market share among the players listed. Magma is a distant fourth with 4.4%.


Turning to earnings performances in Q4 2005, Table 2 shows that the EDA group of six (Altium did not report earnings) delivered a combined net income of $42.5 million. This was a disappointing decline of 34% from the $64 million in the fourth quarter of 2004, but it was an increase of almost 10% from the $38.7 million in the just prior quarter. Year-over-year Synopsys had the largest turnaround of $16 million, going from losing $14 million to a positive net income of $1.7 million. Cadence suffered the largest year-over-year drop, going from a quarterly net income of $60 million to just $27 million. Ansoft and Synplicity showed modest earnings improvements, while Magma suffered a significant decline and Mentor Graphics had a modest decline. On a sequential quarterly basis, Synopsys had the largest earnings decline with a $15.6 million drop. Magma also dropped $1.4 million. Mentor Graphics provided the greatest sequential improvement with an increase of $15 million. Cadence also managed better sequential earnings with 25% improvement.



Company by Company Q4 2005 details:
On January 10, 2006 Altium Limited reported results for its second quarter of fiscal 2006, the period ending December 31, 2005. Total revenue for the quarter was AU$11.9 million, up 13% from AU$10.5 achieved in the same quarter last year. In terms of US$, the revenue was $8.8 million, up 13% from the $7.9 million in the quarter a year ago and up 56% from $5.7 million in the just prior quarter. The fourth calendar quarter has historically been Altium's strongest quarter.

In late December 2005, the company began shipping the latest version of its Altium Designer product range, Altium Designer 6.0, to customers. No data were given on earnings.

Table 3 below shows the revenue per region in the local currencies as reported by Altium.


Nick Martin, founder and CEO of Altium Limited, said, "Solid execution has delivered encouraging results for Altium. December 2005 saw the completion of a productive quarter for us. We grew our business by 13% over the corresponding period, released a substantial upgrade to Altium Designer, and, at the same time, restructured our European, US and Asia Pacific sales operations. These elements strongly position us for future growth and achieving return on investment for our shareholders."


On February 14, 2005 Ansoft Corporation reported financial results for the third quarter of its 2006 fiscal year, the period ending January 31, 2006. Total quarterly revenue for the company was $19.7 million, an increase of 13% over the $17.4 million in the same quarter a year earlier and a 9% increase from the $18 million in the just prior quarter. The $19.7 million was about the midpoint of the guidance given last quarter. License revenue at $11 million accounted for 57% of total revenue, a 10.5% increase year-over-year and a 23% increase sequentially. Service revenue at $8.4 million accounted for 43% of total revenue, a 17% increase year-over-year but a 5.6% decline sequentially.

In the first fiscal quarter of Ansoft's fiscal year, Asia was strongest in terms of percentage growth. In the second quarter, North America was strongest. The recent third fiscal quarter "belonged to Europe" (see Table 4 ).



1 | 2 | 3 | 4  Next Page »



Review Article Be the first to review this article
CST: Webinar September 14, 2017

Synopsys: Custom Compiler

Featured Video
Editorial
Peggy AycinenaWhat Would Joe Do?
by Peggy Aycinena
Real Intent: Leveraging on Investments
More Editorial  
Jobs
Senior R&D Engineer...Timing Closure Specialist for EDA Careers at San Jose or Anywhere, CA
FPGA Engineer for Teradyne Inc at San Jose, CA
Analog Hardware Engineer for Teradyne Inc at San Jose, CA
Technical Support Engineer EU/Germany/UK for EDA Careers at N/A, United Kingdom
Field Application Engineer for Teradyne Inc at San Jose, CA
Senior Front-End RTL Design AE for EDA Careers at San Jose, CA
Upcoming Events
CODES+ISSS 2017, Oct 15-20, 2017, Lotte Hotel, Seoul, South Korea at Lotte Hotel Seoul Korea (North) - Oct 15 - 20, 2017
DVCon 2017 Europe, Oct 16 - 17, 2017, Munich, Germany at Holiday Inn Munich City Centre Munich Germany - Oct 16 - 17, 2017
11th International Symposium on Networks-on-Chip (NOCS 2017) at Seoul Korea (South) - Oct 19 - 20, 2017



Internet Business Systems © 2017 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