Commentary: EDA Industry Update – March 2010 What did the Last Quarter Bring?


Of course, large companies have positive characteristics as well, just not entrepreneurial or especially innovative. They often have vast resources for marketing programs and their sales channels are much better developed and coordinated then a startup's. These same large companies carefully track the progress of a startup and can be counted on to acquire them, when the timing's right. This is all part of the EDA ecosystem that's worked for many years.

Startup, emerging company, large established players. In an ecosystem such as EDA, we need both large suppliers and innovative small companies to keep driving and encouraging technological advances.”


How did the G5 EDA Vendors fair during the 4th Quarter of 2009?

With respect to the combined G5 revenue total, Table 1 reveals that the covered vendors delivered a stronger nominal Q4 2009 than they did in the just previous third quarter of 2009 by some 5.4 % to reach $829 million. But the G5 still fell short of their year-over-year Q4 2008 combined total of $854 million by about 3%, as each of the BIG 3 delievered Q4 2009 revenue results that were off a few percentage points from the corresponding quarter in 2008. Altium was down and Magma was up, but both contributions were too small to change the G5's combined outcome.



Table 2 reveals that the nominal Q4 2009 total earnings of the G4 vendors reporting quarterly earnings turned around their combined results compared to Q3 2009 by some $189 million, as both Mentor Graphics and Synopsys each delivered generous sequential net income improvements to get deep into back ink. Cadence managed to report virtually breakeven in Q4 2009 and Magma went negative again. Of course the combined G4 earnings in Q4 2009 took a huge positive leap of $1.8 billion year-over-year, almost solely due to Cadence's monumental positive difference of $1.636 billion in year-over-year Q4 profitability, although the other three entities also contributed.




Company by Company Q4 2009 details:



On February 22, 2010 Altium Limited (ASX:ALU) released its audited statement for the half-year ending December 31, 2009. Total revenue was of $21.7 million for the half year, a decrease of 19% compared the half year ending December 31, 2008. Nevertheless, the vendor improved its cash balance to $4.1 million as of December 31, 2009, an increase of 17% from the level of $3.5 million as of June 30, 2009.

On a region by region basis, Altium's half year revenue measured in US$ was off 24% year-over-year in the Americas, off 19% measured in euros in Europe, off 17% measured in US$ in Asia Pacific, and off 49% in US$ in Greater China.

"As we mentioned in our update in January 2010, the first half (July - December 2009) of this financial year reflected tough economic conditions in electronics design markets around the world," said CEO Nick Martin. "Our assumptions that the next six months will continue to be difficult remain unaltered. However, we have seen a marked increase in new customers moving to Altium in the US and Europe. We reported in January that 275 companies had bought Altium solutions for the first time in the US in the last (October - December) quarter. That number is matched in Europe, and both are trends that continued through calendar year 2009.

"Looking ahead, we are on track to release the next major version of our software to the market late in this third quarter, and our research and development efforts now focus on exciting new developments in the area of electronics design data management. This will create new opportunities for us at the enterprise level in organizations later this calendar year,” Martin concluded.

EDA Commentary readers are encouraged to sift through the detailed profile on happenings at Altium Limited posted in EDA Weekly on EDAcafe.com from March 01, 2010 to March 15, 2010, available permanently at the following URL:

http://www10.edacafe.com/nbc/articles/view_weekly.php?articleid=793661
 



On February 03, 2010 Cadence Design Systems, Inc. (NASDAQ: CDNS) announced results for its fourth quarter and year, the periods ending on December 31, 2009.

Cadence reported fourth quarter 2009 revenue of $220 million, down 3% compared to revenue of $227 million reported for the same period in 2008, and up 2% compared to revenue of $216 million in Q3 2009. The $220 million for Q4 2009 was exactly in the middle of the range of revenue guidance provided last quarter.

The real news this quarter was the improvement in earnings for Cadence compared to the disaster in Q4 2008. On a GAAP basis, Cadence recognized net income of $2 million, or $0.01 per share on a diluted basis, in the fourth quarter of 2009, compared to a net loss of…gasp…$1.63 billion, or $(6.55) per share on a diluted basis in the same period in 2008. In sequential Q3 2009, Cadence lost $14 million. Fourth quarter 2009 GAAP net loss per diluted share was expected to be in the range of $(0.08) to $(0.06), according to the guidance given three months ago.

Revenue for entire year 2009 totaled $853 million, compared to revenue of $1.04 billion in calendar year 2008. The net loss for 2009 was $150 million, or $(0.58) per share on a diluted basis, compared to an unprecedented net loss of $1.86 billion, or $(7.30) per share on a diluted basis for 2008.

The $853 billion for all of 2009 was near the top end of the range given as guidance 3 months ago. On a GAAP basis, net loss per diluted share for fiscal 2009 was expected to be in the range of $(0.66) to $(0.64) in guidance given just last quarter.

The GAAP net loss for the fourth quarter and fiscal year 2008 included a non-cash “impairment charge” of $1.36 billion, related to Cadence's goodwill, intangible assets, and fixed assets. The impairment charge, which was driven by adverse economic conditions and a decline in Cadence's market capitalization, was said to have had no effect on Cadence's cash flows.

"In 2009, we positioned Cadence for future growth. We improved our customer engagement, strengthened our foundation technology, and reduced our cost structure. We've identified new opportunities for growth, and renewed Cadence's culture of innovation and accountability," said Lip-Bu Tan, president and chief executive officer. "Our primary operational focus in the year was to enhance the level of research and development engagement at key accounts and open new business opportunities for the company."

"In 2009, we significantly improved operating efficiency while strategically redeploying resources," said Kevin S. Palatnik, senior vice president and chief financial officer, adding, "I believe that with continued strong focus on execution, we will expand our position with customers, grow the top line and improve profitability over time."

Business Outlook:

For the first quarter of 2010, the company expects total revenue in the range of $210 million to $220 million. First quarter GAAP net loss per diluted share is expected to be in the range of $(0.10) to $(0.08).

For the full year 2010, the company expects total revenue in the range of $865 million to $900 million. On a GAAP basis, net loss per diluted share for fiscal 2010 is expected to be in the range of $(0.29) to $(0.19).



On February 25, 2010 Magma® Design Automation Inc. (NASDAQ:LAVA) reported revenue of $31.0 million for its fiscal 2010 third quarter ended January 31, 2010, above the company's guidance range of $29.5 million to $30.0 million. Revenue increased 1% from the $30.7 million reported for the year-ago quarter ended February 01, 2009, and revenue was up some 4.4% from the just prior sequential quarter.

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