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


Ansoft's "electromechanical segment" at $3.9 million, accounting for 20% of total revenue, was up 33% year-over-year. The �high performance segment� at $15.7 million, accounting for 80% of total revenue, was up only 9% year-over-year. At the end of November 2005, Ansoft released Maxwell v11, its latest 3D electromagnetic analysis software.

The three largest customers in the last quarter were Intel, IMOD (Israeli Ministry of Defense) and NorthropGrumman.

Net income for the quarter was $4.2 million, an excellent 53% increase from the $2.8 million a year earlier, and a 4% rise from the $4 million in the prior quarter.

Nicholas Csendes, Ansoft's President and CEO, said, "We had an excellent quarter with more than 50% growth in earnings. For the fourth [fiscal] quarter, we expect record revenues and record earnings."


On February 1, 2006 Cadence Design Systems, Inc. reported results for the fourth quarter and the year, the period ending December 31, 2005. Total revenue for the quarter was $378 million, an increase of 10% from the $343 million in the fourth quarter of 2004 and a 12% increase from the $337 million in the just prior quarter. The $378 million was above the high end of the range given for guidance last quarter. Product revenue was $257 million, accounting for 68% of total revenue, a 14% increase year-over-year and an 18% increase sequentially. Maintenance revenue was $88 million, accounting for 23% of total revenue, an increase of nearly 6% year-over-year and a 1% rise sequentially. Service revenue was $32.7 million, accounting 9% of total revenue, a decrease of 1% year-over-year and a 3% rise sequentially.

North America accounted for 42% of total revenue, Europe 20%, Japan 26% and Asia 12%. North America was up 3% year-over-year and down 11% sequentially. Europe was down 27% year-over-year but up 7% sequentially. Japan was up 104% year-over-year and up 46% sequentially. Asia was up 20% year-over-year and up 124% sequentially.

Table 5 below presents the breakdown by product segment. (The original data provided by Cadence was in terms of percentages of total revenue). Functional Verification and Digital IC Design exhibited solid revenue growth, both year-over-year and sequentially.


Net income for the quarter was just $25.6 million, a 56% year-over-year decline from the $60 million in the fourth quarter of 2004, but it was a 25% increase from the $21 million in the third sequential quarter.

On February 8, 2006 the Cadence Board of Directors approved an authorization to repurchase up to $500 million of its common stock.

Bill Porter, senior vice president and chief financial officer, said, "We had a terrific fourth quarter and finished 2005 with good momentum. Our product portfolio is very competitive, our new initiatives such as kits and segmentation are starting to ramp, and our enterprise approach is winning with customers."

Mike Fister, president and CEO of Cadence Design Systems, Inc., said, "Throughout 2005 we delivered on our strategy to grow our core business through technology innovation, to expand into adjacencies such as verification and manufacturability, and to pursue pricing and business models for value. With our success this past year, we've laid the groundwork for growth and market expansion in 2006 and beyond."


On February 2, 2006 Magma Design Automation, Inc. announced the financial results for its third fiscal period which ended January 1, 2006. Total revenue for the quarter was $41 million, an increase of nearly 11% from the $37 million in the same quarter last year and a 3.6% rise from the $40 million in the just prior quarter. The $41 million was a record and above the midpoint of the range given as guidance last quarter. License revenue at $35 million, accounting for 85% of total revenue, was up 10% year-over-year and up almost 7% sequentially. Services revenue at $6.4 million, accounting for 16% of total revenue, was up 14% year-over-year, but down 10.5% sequentially. Some 71% of total revenue came from prior period backlog.

North America accounted for 51% of total revenue, Europe 37%, Japan 8% and AP 4%. On a sequential basis North America was down 29%, Japan was down 14%, Asia Pacific was down 24%, but Europe at $15.4 million was up 243% from the $4.5 million in the preceding quarter.

Rajeev Madhavan, chairman and CEO of Magma, said, "It was a good quarter for Magma in all aspects of our operation. We achieved record revenue again - the third quarter in a row we have accomplished that - and all key financial metrics finished within our target ranges."

According to Roy Jewell, President and CEO, "Magma added 10 new logos to our customer list and are now approaching 20,000 seats licensed. Notable deals in the quarter include one with one of the world's leaders in mobile communications; with one of the worlds - another with one of the world's largest microprocessor companies; and another one with Japan's largest IDMs."

Litigation expense for all of the actions concerning Synopsys was $6.2 million in the quarter, compared to $3.9 million for the preceding quarter. Year-to-date Synopsys litigation expense is at $13 million, which is $7 million over the firm's original forecast and guidance. The company commented that the duration of a few substantial transactions was shorter than originally forecast due in part to customer comfort level with the progress of this ongoing litigation.


On January 26, 2006 Mentor Graphics announced the results for the fourth quarter and the year, the period ending December 31, 2005. Total revenue for the quarter was $221 million, an increase of nearly 3% from the $215 million in the fourth quarter of 2004 and increase of 34% from the $164 million in the just prior quarter. The $221 million compares to the $216 million given as guidance last quarter. System and Software revenue was $145 million, up 4% year-over-year and up 59% sequentially, accounting for 66% of total revenue. Service and support revenue was $75 million, up less than 1% year-over-year and up almost 3% sequentially. Service and support accounted for 34% of total revenue.

Walden C. Rhines, chairman and CEO of Mentor Graphics, said, "We were pleased to see continued growth in bookings in the fourth quarter of 2005, especially considering the tough comparison to last year's fourth quarter growth of more than 35%. Renewals showed strong growth, with contract values up nearly 30% over prior contract levels. Mentor's book-to-bill ratio was positive for the year, and the fourth quarter was the highest quarterly book-to-bill ratio since 1996."

Compared to the fourth quarter of 2004, bookings grew 50% in Integrated Systems Design, 15% in IC Design to Silicon and 20% in New and Emerging.

The split of revenue by geography was 45% North America, 35% Europe, 10% Japan, and 10% Pacific Rim.

Net income for the quarter was $15.4 million, down slightly form the $15.8 million in the fourth quarter of 2004. Special charges of $4.2 million were restructuring- related.

Gregory K. Hinckley, president of Mentor Graphics, said, "During the quarter, we examined several opportunities for savings to fuel our investment in high growth opportunities like Calibre Design-for-Manufacturing, Electronic System Level (ESL) tools, and automotive. As a result of this review, we took steps which will conclude in the first quarter to reduce cost and headcount in our Intellectual Property business."


On February 15, 2006 Synopsys, Inc. announced the results for its first fiscal quarter of 2006, the period ended January 31, 2006. Total revenue for the quarter was $260 million, an increase of 8% over the $241 million in the same quarter a year ago and a 3.5% increase from the $251 million in the prior quarter. The $260 million was above the midpoint of the guidance given last quarter. Time based licenses at $189 million accounted for 81% of total revenue, a 13% increase year-over-year and a 12% increase sequentially. Upfront license revenue was $16 million, accounting for 3% of total revenue; this was down 22% year-over-year and down 48% sequentially. Maintenance and service revenue was $46 million, or 16% of total revenue; this was down 8% from the prior year and down 12% from the preceding quarter. One customer accounted for more than 10% of revenue in the quarter.

On geographic basis, North American revenue at $140 million accounted for 54% of total revenue, a 6% increase year-over-year and a 2.6% rise sequentially. European revenue at $42 million accounted for 16% of total revenue, a 13.4% increase year-over-year and a 1.5% rise sequentially. Japanese revenue at $42 million accounted for 16% of total revenue, a 9% decrease year-over-year and 5% increase sequentially. Revenue from the rest of AP at $37 million accounted for 14% of total revenue, a 37% increase year-over-year but down 1.6% compared to the prior quarter.



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