EDA Industry Update – July 2010
What did nominal Q1 2010 Bring?
by Dr. Russ Henke
Attention Loyal Readers of the Electronics IP Industry & the EDA Industry Commentaries presented here quarterly since 2003:
Don’t worry – they aren’t going away! They will each continue to appear quarterly, but the latest EDA and IP information will be combined into one quarterly document that will be published as part of the EDA WEEKLY collection. The first edition in this new format will appear in late December 2010 or early January 2011, cleverly entitled, "EDA & IP Industry Commentary for Q3 2010." Subsequent EDA and IP information will likewise appear each subsequent quarter in this fashion.
Content-continuity with previously-posted IP and EDA data will be fully preserved, as follows:
- The last stand-alone Electronics IP Industry Commentary for August 2010 covered the G5 IP vendor revenue & earnings results, etc., for Q2 2010.
- The last stand-alone EDA Industry Commentary for July 2010 covered the G5 EDA vendor revenue & earnings for nominal Q1 2010.
- Subsequently, the G5 EDA vendor revenue & earnings for nominal Q2 2010 were contained in the EDA WEEKLY issue of September 13, 2010, entitled, "Whither EDA?"
- All previous Commentaries and EDA WEEKLIES, including those referred to above, are immediately available to readers by clicking on the “Archived Commentaries” or “Archived Weeklies” URL’s that appear in their respective identity boxes on the main front page of EDACafe.com.
In each of the 28 quarterly EDA Industry Commentaries published in EDAcafe.com since May 2003 by Henke Associates, 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 originally selected companies were Altium, Ansoft, Cadence, Magma, Mentor Graphics, Nassda, Synopsys, Synplicity and Verisity.
As part of continuing EDA industry consolidation, two previously-selected EDA vendors, namely Verisity and Nassda, had been acquired by EDA vendors Cadence and Synopsys, respectively, and hence were dropped from the quarterly EDA Commentaries. More recently, EDA vendor Synplicity was acquired by Synopsys, and EDA vendor Ansoft was acquired by MCAE vendor ANSYS. Consequently, both Synplicity and Ansoft no longer independently appear in these EDA Industry reports.
This July 2010 EDA Industry Commentary covers (for the nominal First Quarter  of 2010) the performances of the remaining group of five (G5) EDA vendors: Altium, Cadence, Magma, Mentor Graphics, and Synopsys. The timing of the publication of these quarterly commentaries is usually governed by the official financial news release of the last G5 vendor reporting; this time Mentor Graphics was the last to report.
EDA News Highlights are preceded by the revenue & earnings performances of the selected group of EDA players for nominal Q1 2010, and then EDA vendor by vendor Q1 financial details. When available, these details include individual EDA vendor forecasts for nominal Q2 2010. EDA Vendor stock prices are discussed. Finally, some fresh “July 01” Semiconductor Industry Association and EDA Consortium stats are included if they have been released by press time.
The G5 EDA vendors covered here are:
 See footnotes at end of the EDA COMMENTARY.
The text below is divided into these major categories:
How'd the EDA G5 fair during the 1st Quarter of 2010?
Vendor by Vendor Q1 2010 details
General News that affects the Economy
Recent EDA Industry News Highlights
EDA Big 3 vs. MCAD Top 3 Vendors Q1 2010
EDA Vendor Q1 2010 Stock Performances
EDA Vendor Q2 2010 Stock Performances
How'd the EDA G5 fair during the 1st Quarter of 2010?
The combined G5 revenue total of $785.5 million for nominal Q1 2010 barely edged the $781 million for Q1 2009, by less than 1%. Both Cadence and Synopsys were up, but Mentor and Magma were down. See Table 1.
As is quite natural, nominal Q1 2010 combined G5 revenue was less than the sequential combined total in Q4 2009, but this time Mentor was primarily responsible, with its Q1 2010 revenue off by -24% from a monster Q4 2009 revenue result.
Considering earnings in Table 2, Q1 2010 found that three of the four EDA Vendors reporting had slipped into red ink on a GAAP basis, with only Synopsys' consistent profitability keeping the G4 total Q1 2010 net income barely into black ink. But hey, what's a sequential negative difference like Q4 2009 to Q1 2010 of $167.29 million in quarter-to-quarter profit mean among friends? It means that the G4 total profit of $4.07 million in Q1 2010 was $167.29 million worse than the $171.36 million total G4 profit in the just prior Q4 2009! On the other hand, Q1 2010's G4 total profit of $4.07 million was an improvement of $41.89 million over the G4 total loss of $37.82 million in Q1 2009 (i.e. year over year).
Last year in Q1, the same three vendors were also in red ink, but even Synopsys' Q1 2009 profit of over $48 million could not offset the losses among the other three back then, especially Cadence's $63 million Q1 2009 net loss.
Vendor by Vendor Q1 2010 details
On April 14 2010 Altium Limited (ASX: ALU) reported sales and revenue results for nominal Q1 2010, the quarter ending March 31, 2010.
- Q1 2010 sales of US$11.1 million, an increase of 14% over the $9.7 million equivalent period a year ago Q1 2009.
- Q1 2010 revenue of US$11.3 million, an increase of 13% over the $10 million equivalent period a year ago Q1 2009.
Nick Martin, CEO of Altium, commented, “We still find ourselves in a very difficult climate, and while we need to be careful not to read too much into these results, there are some positive signs of change in Europe. Even though we are expecting to release a significant upgrade to our flagship AltiumDesigner product during Q4, and the momentum of companies switching to our design solutions continues, we will continue to manage things tightly in an unpredictable environment."
On a region by region basis, measured in local currency, on a year over year basis, sales in the Americas were up 5% to $4.33 million; sales in Europe were up 31% to € 3.21 million,; sales in Asia-Pacifc were up 32% to $1.34.million; sales in China were down 16% to 0.925 million, and consulting was also down 80% to € 0.04 million.
EDA Commentary readers are encouraged to sift through the detailed profile on happenings at Altium Limited posted in EDA Weekly on EDAcafe.com on March 01, 2010, available permanently at the following URL:
Altium's self description:
Altium Limited (ASX:ALU) provides next-generation electronics design solutions that break down the barriers to innovation. Altium's solutions are unique because they unify the separate processes of electronics design, all within a single electronics design environment, working off a single data model, linking all aspects of electronics product design into one process.
This unified design environment helps electronics designers easily harness the latest devices and technologies, manage their projects across broad design 'ecosystems', and create connected, intelligent designs.
Founded in 1985, Altium has headquarters in Sydney, sales offices in the United States, Europe, China, and resellers in all other major markets. For more information, visit www.altium.com .
On April 28, 2010 Cadence Design Systems, Inc. (NASDAQ: CDNS) announced its financial results for the first quarter of its fiscal year and the calendar year 2010, the period ending March 31, 2010.
Cadence reported Q1 2010 revenue of $221,938,000 [$222 million], less than 1% better than the $220,279,000 [$220] million in sequential Q4 2009, but 7.58% improved compared to revenue of $206,302,000 [$206] million reported for the same period year over year in Q1 2009.
On a GAAP basis, Cadence endured a net loss of $11,785,000 ($11.8 million), or $(0.04) per share on a diluted basis, in the first quarter of 2010, going in the wrong direction compared to a net profit of $1,790,000 [$1.8 million], or $.01 per share in sequential Q4 2009, but of course significantly improved over the disastrous net loss of $63,257,000 ($63.3 million), or $(0.25) per share on a diluted basis in the same period year over year in Q1 2009.
Cadence's Q1 2010 revenue of $220 million was at the top of the range of guidance provided last quarter, and loss per share of 4 cents was much better than the guidance of a loss of 8 cents to 10 cents.
"Cadence is off to a good start in 2010. The team executed across the board and our focus on customer engagement continues to yield success," said Lip-Bu Tan, president and chief executive officer. "Business improved in all geographies with strength in Asia and North America, and in all platform areas, especially verification, custom and digital design."
"We put up another consistent operating performance in the first quarter with our key operating metrics meeting or exceeding our expectations," said Kevin S. Palatnik, senior vice president and chief financial officer.
For nominal Q2 2010, the company expects total revenue in the range of $215 million to $225 million. Second quarter GAAP net loss per diluted share is expected to be in the range of $(0.05) to $(0.03).
For the full year 2010, the company expects total revenue in the range of $865 million to $900 million. On a GAAP basis, it still expects a net loss per diluted share for fiscal 2010 in the range of $(0.23) to $(0.13).
Cadence self description:
Cadence enables global electronic-design innovation and plays an essential role in the creation of today's integrated circuits and electronics. Customers use Cadence® software and hardware, methodologies, and services to design and verify advanced semiconductors, consumer electronics, networking and telecommunications equipment, and computer systems. Cadence is headquartered in San Jose, CA, with sales offices, design centers, and research facilities around the world to serve the global electronics industry. More information about Cadence and its products and services is available at www.cadence.com . Cadence and the Cadence logo are registered trademarks of Cadence Design Systems, Inc. All other trademarks are the property of their respective owners.
On May 27, 2010 Magma® Design Automation Inc. (NASDAQ:LAVA) reported revenue of $33.609 million for its fourth fiscal quarter ending May 2, 2010, which is treated herein as nominal Q1 of 2010. While Q1 2010 revenue was above the $32.5 to $33.0 million guidance range given three months ago, Q1 2010 revenue was still down 1.35% compared to the same quarter last year, when Magma recognized $34.070 million in revenue. For the just prior nominal Q4 2009, Magma reported just $30.96 million, so Q1 2010 was up 8.56% sequentially.
Magma also reported $123.077 million for its 2010 fiscal year, the period ending May 2, 2010. This result was above the guidance for the year given 3 months go, but it is down some 16.2% from the revenue of $146.857 million realized last year.
"Magma is in a much stronger position than a year ago, both in terms of products and financial performance," said Rajeev Madhavan, Magma chairman and chief executive officer. "Our key product groups - Talus, Titan, FineSim and Quartz - are demonstrating competitive strength and continuing to improve their traction in the market. As to our financial performance in fiscal 2010, we beat all guidance ranges and continued consistent cash generation. We are optimistic as we enter the new fiscal year."
GAAP Income Results
In accordance with generally accepted accounting principles (GAAP), Magma improved to a net loss of $728,000, or $(0.01) per share (basic and diluted), for nominal Q1 2010 compared to a net loss of $9,894,000, or $(0.21) per share (basic and diluted), for the year-ago Q1 2009. In the just prior Q4 2009, Magma lost $2,600,000 or $(0.05) per share.
The net loss per share in nominal Q1 2010 of one cent was far better than the guidance for nominal Q1 2010 given three months ago, when the guidance forecasted a Q1 2010 loss per share of 8 to 9 cents.
For the entire year, fiscal 2010 Magma reported a GAAP net loss of $3.334 million, or $(0.07) per share (basic and diluted), compared to a net loss of $129.242 million, or $(2.89) per share (basic and diluted), for fiscal 2009.
Since revenue was down fiscal 2010 to fiscal 2009 by some 16%, the reduction in net loss this year vs. last year of $125.908 million must have been what Mr. Madhavan was referring to in his comments about “stronger financial performance” above.
For Magma's nominal Q2, ending August 1, 2010, the company expects total revenue in the range of $31.0 million to $31.5 million. GAAP net loss per share is expected to be in the range of $(0.07) to $(0.06). Then for Magma's fiscal 2011, ending May 1, 2011, the company expects total revenue in the range of $130.0 million to $133.0 million. GAAP net loss per share is expected to be in the range of $(0.16) to $(0.14). A Financial Data Supplement containing additional first quarter and full fiscal year 2011 guidance, as well as detailed financial information intended to provide further insight into Magma's business is available online on the Magma website: http://investor.magma-da.com/supplement.cfm
Magma self description:
Magma's electronic design automation (EDA) software provides the "Fastest Path to Silicon"(TM) and enables the world's top chip companies to create high-performance integrated circuits (ICs) for cellular telephones, electronic games, WiFi, MP3 players, digital video, networking and other electronic applications. Magma products are used in IC implementation, analog/mixed-signal design, analysis, physical verification, circuit simulation and characterization. The company maintains headquarters in San Jose, Calif., and offices throughout North America, Europe, Japan, Asia and India. Magma's stock trades on NASDAQ under the ticker symbol LAVA. Visit Magma Design Automation on the Web at www.magma-da.com . Magma is a registered trademark and "Fastest Path to Silicon" is a trademark of Magma Design Automation. All other product and company names are trademarks and registered trademarks of their respective companies.
On May 28, 2010 Mentor Graphics Corporation (NASDAQ: MENT) announced results for its fiscal first quarter ending April 30, 2010, treated here as nominal Q1 2010.
For the nominal Q1 2010, the company reported revenues of $180.6 million, down 6.81% year over year from revenues of $193.8 million in Q1 2009, and down 23.83% sequentially from $237.1 million in the just prior and traditionally stronger nominal Q4 2009. Guidance for Q1 2010 given some 3 months ago was for Q1 2010 revenue to be $180 million.
GAAP net loss in Q1 2010 came to $23,025,000, or a GAAP loss per share of $0.22. This compares unfavorably to a year over year GAAP loss of “only” $12,956,000 in Q1 2009 ($0.14 loss per share). The $23.0 million loss in Q1 2010 is fully $62.4 million worse than the $39.4 million in net income achieved in the just prior Q4 2009. Mentor missed its Q1 2010 earnings forecast by plenty; guidance for Q1 2010 some 3 months ago was for earnings per share to be in the range of $0.00 to a loss of only 5 cents per share.
“While the quarter's bookings were lower than last year due to the concentration of scheduled renewals in the second half of this year, the renewals that did occur in the first quarter were very strong, growing 25% from their prior contract values for the renewals within our top ten contracts,” said Walden C. Rhines, CEO and chairman of Mentor Graphics. “Leading indicators that we have historically tracked were also very positive: support reinstatements grew 70%; our base business, orders less than $1 million typically from smaller customers, grew 20% over the year ago quarter; and consulting and training bookings grew 25% over last year.”
For nominal Q2 2010 ending July 31, 2010, the company expects revenues of about $180 million, and GAAP loss per share of $0.17 to $.022. For the full year the company expects revenues of $870 million, and GAAP earnings per share of $.10 to $.15.
During the quarter, the company reported that it had extended its customer partnerships with three significant new relationships:
- Mentor joined the Nano2012 program led by STMicroelectronics, in partnership with the French government, to develop leading-edge technologies for 32nm and below processes.
- Freescale Semiconductor named Mentor Graphics its commercial Linux strategic partner.
- NetLogic Microsystems entered into a strategic collaboration with Mentor Graphics to provide multi-core multi-threaded Linux for their processors.
“Despite two sizeable acquisitions in the last year, our operating expense is still down on an absolute basis year on year. We expect our continued strong emphasis on cost controls, as well as an improving foreign exchange environment, particularly the Euro, positions us well for the year,” said Gregory K. Hinckley, president of Mentor Graphics.“This fifth consecutive quarter of meeting or beating guidance, given our transparent real-time financial model, gives us confidence that the (economic) recovery is continuing.”
During the quarter, Mentor strengthened its offerings to the DO-254 [see paragraph A below] market with a joint announcement of a product flow with The MathWorks, extensions to Mentor's HDL Designer product to support DO-254 coding standards, and a new product, the ReqTracer™ tool, that helps automate requirements capture.
The company's Mechanical Analysis Division launched FloTHERM® IC for semiconductor package thermal characterization and design. Mentor launched 3D electromagnetic analysis for its HyperLynx® printed circuit board product line.
The company completed its previously announced acquisition of Valor Computerized Systems which offers PCB manufacturing software and also acquired technology that provides on-demand electrical schematics for automobile dealerships. In early May 2010, Mentor launched its Calibre® InRoute software which fully integrates its Calibre tools into its Olympus-SOC™ place and route environment. This allows designers to invoke Calibre verification and design-for manufacturing tools from within the place and route environment to verify and improve designs much faster, significantly speeding time to design closure.
In April 2010, the Valor® MSS Software suite won the Circuits Assembly New Product Introduction Award and the 2010 Surface Mount Technology Vision Award. Design News granted FloEFD™ mechanical analysis technology its Golden Mousetrap Award for Best Product.
In February, the International Engineering Consortium honored HyperLynx Power Integrity with its annual Design Vision Award in the System Modeling and Simulation Tool Category. Additionally, Mentor's Dr. Vladimir Székely received the Dennis Gabor Award for Innovation, the country of Hungary's highest technical honor.
EDA Commentary readers are encouraged to sift through the detailed profile on happenings at the Mentor Graphics Mechanical Analysis Division posted in EDA Weekly on EDAcafe.com from December 07, 2009 to December 22, 2009, and available permanently at the following URL:
[A]: RTCA/DO-254, DESIGN ASSURANCE GUIDANCE FOR AIRBORNE ELECTRONIC HARDWARE is a document providing guidance for the development of airborne electronic hardware, published by RTCA, Incorporated. The DO-254 standard was formally recognized by the FAA in 2005 via AC 20-152 as a means of compliance for the design of complex electronic hardware in airborne systems. Complex electronic hardware includes devices like Field Programmable Gate Arrays (FPGAs), Programmable Logic Devices (PLDs), and Application Specific Integrated Circuits (ASICs). The DO-254 standard is the counterpart to the well-established software standard RTCA DO-178B /EUROCAE ED-12B. With DO-254, the FAA has indicated that avionics equipment contains both hardware and software, and each is critical to safe operation of aircraft. There are five levels of compliance, A-E, which depend on the effect a failure of the hardware will have on the operation of the aircraft. Level A is the most stringent, defined as "catastrophic", while a failure of Level E hardware will not affect the safety of the aircraft. Meeting Level A compliance for complex electronic hardware requires a much higher level of validation and verification than Level E compliance.
Mentor Graphics self description:
Mentor Graphics Corporation (NASDAQ: MENT) is a world leader in electronic hardware and software design solutions, providing products, consulting services and award-winning support for the world's most successful electronics and semiconductor companies. Established in 1981, the company reported revenues over the last 12 months of about $800 million. Corporate headquarters are located at 8005 S.W. Boeckman Road, Wilsonville, Oregon 97070-7777. World Wide Web site: http://www.mentor.com .(Mentor Graphics, FloTHERM, HyperLynx, Calibre, and Valor are registered trademarks and ReqTracer, Olympus-SOC, and FloEFD are trademarks of Mentor Graphics Corporation. All other company or product names are the registered trademarks or trademarks of their respective owners.)
On May 19, 2010 Synopsys, Inc. (NASDAQ: SNPS) reported results for the second quarter of its fiscal year 2010, the period ending April 30, 2010. As is our practice, this quarter will be treated as nominal Q1 2010 for purposes of this EDA WEEKLY article.
For nominal Q1 2010, Synopsys reported revenue of $338,106,000 [$338.1 million], less than 1% growth compared to $336,835,000 [$336.8 million] for year over year Q1 2009, and up 2.4% compared to $330,167,000 [$330.2 million] in sequential Q4 2009.
Guidance provided 3 months ago by Synopsys for Q1 2010 was for revenue between $331 million and $339 million, so they actual result of $338.1 was near the top of the forecat range.
"Synopsys again delivered solid results this quarter," said Aart de Geus, chairman and CEO of Synopsys. "While the customer backdrop remains cautious, we continue to execute well on our strategy to address customer needs ranging from mainstream to the most advanced silicon design flows, all the way to the rapidly growing IP and systems space. This quarter we made particular progress in the latter, where we believe we have an especially promising outlook."
On a generally accepted accounting principles (GAAP) basis, net income for Q1 2010 was $39,549,000 [$39.5 million], or $0.26 per share, down 18.1% compared to $48,288,000 [$48.3 million], or $0.33 per share, for Q1 2009. Synopsys of course had no prayer that the net income [$39.5 million] in Q1 2010 could match the extra-large sequential Q4 2009 net income of $132,786,000 [$132.8 million].
Synopsys also provided its financial targets for the nominal Q2 2010
Revenue: $330 million - $338 million
GAAP expenses: $275 million - $292 million
Other income and expense: $0 - $3 million
Fully diluted outstanding shares: 149 million - 154 million
GAAP earnings per share: $0.21 - $0.27
Revenue from backlog: greater than 90%
Synopsys' self description:
Synopsys is a world leader in electronic design automation (EDA), supplying the global electronics market with the software, IP and services used in semiconductor design and manufacturing. Synopsys' comprehensive, integrated portfolio of implementation, verification, IP, manufacturing and FPGA solutions helps address the key challenges designers and manufacturers face today, such as power and yield management, system-to-silicon verification and time-to-results. These technology-leading solutions help give Synopsys customers a competitive edge in bringing the best products to market quickly while reducing costs and schedule risk. Synopsys is headquartered in Mountain View, California, and has more than 60 offices located throughout North America, Europe, Japan, Asia and India.
General News that affects the Economy
Jobs, Jobs, Jobs:
July 01, 2010: Initial claims for US unemployment benefits rose last week for the second time in three weeks. At the same time, more than a million US people have lost benefits and more could be cut off now that Republicans in the US Congress have again blocked efforts to extend federal jobless aid. New claims for benefits jumped by 13,000 to a seasonally adjusted 472,000, the US Labor Department said July 01. More than 1.3 million laid-off workers (continued below)
won't get their unemployment benefits reinstated before lawmakers go on a weeklong vacation for Independence Day in the United States. The numbers could reach 3.3 million by the end of this month if the extension is not passed, the US Labor Department said. For the third time in as many weeks, Senate Republicans blocked a bill on June 30 that would have continued unemployment checks to Americans who have been laid off for long stretches. During the recession, the US Congress previously added up to 73 weeks of extra benefits on top of the 26 weeks typically provided by states. Some economists say they may now have to revise their forecasts for US growth in the third quarter, if the benefits are not extended. PS The benefits were not extended before Congress left town for the weekend!
From a June 27, 2010 article in the New York Times, the following are the gist/interpretation and excerpts of a warning by Nobel Laureate Economist Paul Krugman to policy makers in Washington DC:
Recessions are common; depressions are rare. There were only two eras in economic history that were depressions; i.e. the years of deflation and instability that followed the Panic of 1873, and the years of mass unemployment that followed the (Coolidge/Hoover) financial crisis of 1929-31. Both included short periods when the economy grew. But these episodes of improvement were never enough to undo the damage from the initial slumps, and both were followed by relapses.
“We are now, I fear,” said Krugman, “In the early stages of a third depression. The cost - to the world economy and, above all, to the millions of lives blighted by the absence of jobs - will nonetheless be immense. And this third depression will be primarily a failure of policy.” Around the world, some governments (and some US Congressmen) are preaching the need for belt-tightening when the real problem is inadequate spending.
In 2008 and 2009, it seemed as if we might have learned from history. Unlike their predecessors, who raised interest rates in the face of financial crisis, current US and certain world leaders slashed rates and moved to support credit markets. Unlike governments of the past, which tried to balance budgets in the face of a plunging economy, today's governments recently allowed deficits to rise. And these better policies helped the US and the world avoid complete collapse: the recent recession brought on by the 2007-08 (Wall Street/Big Banks) financial crisis arguably (technically) ended (in mid 2009).
But future historians will tell us that that ending wasn't the end of the third depression, just as the business upturn that began in 1933 wasn't the end of the Great Depression. After all, current unemployment - especially long-term unemployment - remains today at levels that would have been considered catastrophic not long ago, and shows no sign of coming down rapidly. And without a change in policy, both the United States and Europe are well on their way toward Japan-style deflationary traps.
In the face of this grim picture, you might expect policy makers to realize that they haven't yet done enough to promote recovery. But no: over the last few months there has been a stunning resurgence of hard-money and balanced-budget orthodoxy!
As far as rhetoric is concerned, the revival of the old-time religion is most evident in Europe, where officials seem to be getting their talking points from the collected speeches of Herbert Hoover, up to and including the claim that raising taxes and cutting spending will actually expand the world economy, by “improving business confidence.”
As a practical matter, however, America isn't doing much better. The Fed seems aware of the deflationary risks - but what it proposes to do about these risks is, well, nothing. The Obama administration understands the dangers of premature fiscal austerity - but because Republicans and conservative Democrats in Congress won't authorize additional aid to state governments, that austerity is coming anyway, in the form of budget cuts at the national, state and local levels.
Why the wrong turn in policy? The hard-liners often invoke the troubles facing Greece and other nations around the edges of Europe to justify their actions. And it's true that bond investors have turned on governments with intractable deficits. But there is no evidence that short-run fiscal austerity in the face of a depressed economy reassures investors. On the contrary: Greece has agreed to harsh austerity, only to find its risk spreads growing ever wider; Ireland has imposed savage cuts in public spending, only to be treated by the markets as a worse risk than Spain, which has been far more reluctant to take the hard-liners' medicine.
It's almost as if the financial markets understand what policy makers seemingly don't: that while long-term fiscal responsibility is important, slashing spending in the midst of a depression, which deepens that depression and paves the way for deflation, is actually self-defeating.
So I don't think this is really about Greece, or indeed about any realistic appreciation of the tradeoffs between deficits and jobs. It is, instead, the victory of an orthodoxy that has little to do with rational analysis, whose main tenet is that imposing suffering on other people is how you show leadership in tough times. And who will pay the price for this triumph of orthodoxy? The answer is, tens of millions of unemployed workers, many of whom will go jobless for years, and some of whom will never work again.
July 02, 2010: The US Labor Department's report on June jobs came out on schedule. As expected - bad news and good news. The bad news: Huge federal census layoffs cut US payroll totals in June for the first time in six months, overwhelming the good news: private employers' success in adding a reasonable number of jobs. The US unemployment rate fell to 9.5% percent, its lowest level in almost a year.
Summing it all up, US employers cut 125,000 net jobs in June 2010, the most since October 2009, the Labor Department said. The net loss was caused by the end of 225,000 temporary census jobs. On the other hand, US businesses added a net total of 83,000 workers, a definite improvement from May.
Even with the slight hiccup in January 2010, the trend of reversing the 19 month string of job losses from December 2007 to July 2009 (only June and July 2009 of that negative string are shown in the above graph), and in August 2009 beginning to reduce the losses until the US began adding jobs in February 2010, the slope has been unmistakably upward and to the right for the last year.
Sure, thousands of the new jobs in the 1H 2010 were for the US census, just as the majority of the job losses in June 2010 were discharged census workers. One either gives credit to Mr. Obama for all the job additions during the 1H of 2010 and blame for the loss of census jobs in June; or the census workers positive impacts in 1H 2010 and the deleterious effects of census workers departures in June 2010 should both be ignored.
President Obama acknowledged the slow pace of the recovery and used the new jobs figures on July 2nd to argue for more stimulus spending and extended unemployment benefits. "We're not headed there fast enough for a lot of Americans," the president said. "We're not headed there fast enough for me, either."
Besides, this writer believes that the economic recovery would still be underway, were it not for the US-wide negative energy of the Deepwater Horizon disaster (see Personal Assessment below). The oil spill cast a pall over everything. In an economic recovery, an ongoing optimistic attitude is mandatory. Without a positive attitude, small glitches threaten to perpetuate a vicious cycle for the economy. "It is a Catch-22 situation," said Sung Won Sohn, professor at California State University, Channel Islands. "Businesses are reluctant to hire for fear of a 'double-dip' recession. Without jobs, people are watchful of their spending, a danger to the recovery."
The unemployment rate fell to 9.5% in June 2010 as 652,000 people gave up on their job searches and left the US labor force. Still, 14.6 million people were looking for work in June. Counting those who have given up their job searches and those who are working part time but would prefer full-time work, the underemployment rate in the United States edged down 0.1% from May to 16.5%.
The US now has 7.9 million fewer private payroll jobs than it did when the most recent recession began in December 2007.
This writer documented his April 21, 2010 assessment on the US economy in his June 21, 2010 EDA WEEKLY:
Stated simply, the Gulf Oil Spill has crept both directly and insidiously into the collective psyche of the American people, and this disaster is itself chiefly responsible for slowing the emerging US economic recovery in its tracks, as it has shaken our traditional confidence that was just beginning to be restored. Likewise, its spin-off effects are felt worldwide.
US stock markets are retreating, private US hiring in May took a real hit compared to April, thousands of unemployed people have stopped looking for work, state and local budget woes seem intractable, pension programs are hurting, consumer confidence is edgy, foreign issues suddenly loom larger (European debt, decline of the euro), and so on.
Moreover, this oil spill disaster has temporarily diluted public and private confidence in President Obama, since the US Government has also appeared to date to have been partially stymied by the inability of BP or any others to stem the flow of oil into the Gulf resulting from this disaster.
To access the EDA WEELY from which this assessment came, click on:
Until the gushing oil from the Deepwater Horizon catastrophe is plugged, the economic recovery that had been so promising for the last year, will be stalled.
June 28, 2010. The Tropical Storm Alex, expected to become a hurricane, was heading toward the US Gulf coast of northern Mexico and southern Texas. The storm's likely path will take it away from the precise site of the BP Gulf of Mexico Deepwater Horizon oil spill catastrophe, but it might push oil farther inland, disrupting cleanup efforts. Tropical storm-force winds extended up to 105 miles from the storm's center, and Alex was moving toward the north-northwest at 8 mph.
June 29, 2010: Gusting winds from Hurricane Alex are indirectly affecting the BP Gulf oil spill site. Oil-scooping ships in the Gulf have fled to safety because of the rough seas. Officials were trying reposition boom to protect the coastline, but had to remove barges that had been blocking oil from reaching wetlands. The US has accepted offers of help from 12 countries and international organizations.
Alex is still projected to stay far from the spill zone and is not expected to affect recovery efforts at the site of the blown-out well off the Louisiana coast. But the storm's outer edges complicated the cleanup, with waves were as high as 12 feet. Alex late June 29 had maximum sustained winds at 75 mph. The Category 1 storm is the first June Atlantic hurricane since 1995; just our luck. It is headed for the Texas-Mexico border region and is expected to make landfall Wednesday night June 30. Nasty weather will linger in the Gulf through July 01 and maybe beyond.
So far, between 71 million and 138 million gallons of oil have spewed into the Gulf of Mexico from the broken BP well, according to US government and BP estimates. The higher estimate is enough oil to fill half of New York's Empire State Building with oil, according to news reports.
Still in the Gulf are vessels being used to capture or burn oil and gas leaking from the well and to drill relief wells that are said to be the best hope for stopping the leak. BP said it hopes to install a new oil-capturing system by next week that would allow BP to disconnect the equipment faster if (another) hurricane threatens and hook it back up quickly after the storm passes. The containment system now in place is capturing nearly 1 million gallons per day from the well, which is spewing as much as 2.5 million gallons a day, according to the government's worst-case estimate.
The Obama administration said that BP had met its July 1 deadline to pay the federal government for the initial costs of responding to the Gulf oil spill. BP paid two bills totaling about $71 million earlier this month. The government had set a June 30 deadline for the largest of the two bills, which charged the company $69 million. The oil company is still reviewing and processing a third bill for $51.4 million. The White House has long said that as the responsible party, BP must pay all costs associated with the response to the spill.
Hours before Alex was designated a hurricane, President Obama issued an emergency declaration for Texas, allowing coordination by the Federal Emergency Management Agency with state and local response efforts. Federal authorities said oil and gas operators in the Gulf were beginning to evacuate platforms and rigs in the storm's path. The Bureau of Ocean Energy Management, Regulation, and Enforcement said that 28 of 634 manned production platforms and three of 51 drilling rigs have been evacuated. The bureau estimated that nearly one-quarter of the Gulf's oil production and more than 9% of its natural gas production had been halted.
July 01, 2010: BP's massive oil spill became the largest ever in the Gulf of Mexico today, based on the highest of the federal government's estimates, an ominous record that underscores the oil giant's dire need to halt the gusher.
The oil that's spewed for two and a half months from a blown-out well a mile under the sea hit the 140.6 million gallon mark, eclipsing the record-setting, 140-million-gallon Ixtoc I spill off Mexico's coast from 1979 to 1980.
On July 07, 2010 the Dow Jones industrials soared back above 10,000 after the heavy selling in the stock market during the last two weeks. The Dow rose 275 points, more than 2%, after a modest gain July 06. It was the market's first back-to-back advance since mid-June and the first close above the psychological 10,000 level since June 28. The Russell 2000 index of smaller companies rose 23, or 3.7%, to 612. The NASDAQ composite index rose 66 to 2159, or 3.1%. Was there a positive event in the real world that triggered that optimism, such as BP capping its gushing oil well? No! Just some flush investors grabbing and gobbling stocks that they felt had fallen too far. An instructive case of “trouble in the Gulf for many, meaning a big opportunity for the few.”
Recent EDA Industry News Highlights
On July 6, 2010 the Semiconductor Industry Association (SIA) reported that worldwide sales of semiconductors in May were $24.7 billion, a sequential increase of 4.5% from April when sales were $23.6 billion and a year-on-year increase of 47.6% from May 2009 when sales were $16.7 billion. As expected, the year-on-year growth rate declined slightly from the 50.4% reported in April. All monthly sales numbers represent a three-month moving average.
“Global sales of semiconductors in May reached a new high and remain on pace to reach the SIA forecast of 28.4% growth to $290.5 billion in 2010,” said SIA President George Scalise. “Chip sales have been buoyed by strength in sales of personal computers, cell phones, corporate information technology, industrial applications, and autos. Unit sales of personal computers are now expected to grow by 20% this year and cell phone unit sales are predicted to be up 10 to 12% over 2009 levels.”
“Emerging markets, including China and India, are fueling sales of computation and communications products,” Scalise continued. “The automotive market is also slowly recovering after several years of weak sales. Demand from the corporate information technology and industrial sectors that had pushed out replacement cycles during the global economic recession is beginning to come back.”
SIA once again noted that the industry year-on-year and sequential growth rates are likely to continue to slow during the second half of 2010. “Recent chip sales have shown robust demand, but the year-on-year growth rates also underscore the very depressed market conditions of the first half of 2009. Going forward, the year-on-year growth comparisons will reflect the industry recovery that gained momentum in the second half of last year. Growing concerns about issues such as government debt, declining consumer confidence, and pressures on government spending do not appear to have affected worldwide semiconductor sales to date, but given the semiconductor industry's growing sensitivity to macroeconomic conditions, these issues bear watching in the second half of 2010,” Scalise concluded.
On May 26, 2010 Altium and Aldec announced that they had signed an OEM agreement that adds Aldec's FPGA simulation capabilities to Altium Designer. This agreement is said to add an extra dimension for electronics designers working with FPGAs and provides seamless integration to industry proven VHDL and Verilog simulation from Aldec, integrated within Altium Designer. Electronics designers can now access Aldec's proven simulation technology as part of Altium's unified electronics design architecture.
Nick Martin, CEO of Sydney Australia based Altium Limited, said, "Altium Designer has included simple VHDL simulation for FPGA-based designs for a number of years, but this has not been a core focus area for us. Partnering with Aldec will allow us to provide a high-quality RTL simulation capability for Altium Designer users, both VHDL and Verilog, from a vendor with great technology and credentials in this area.”
Dr. Stanley M. Hyduke, CEO of Aldec, Hendersen, Nevada, said, "Becoming such a central element in simulation for Altium's unified approach to electronics design is an exciting step for Aldec. This agreement will open new opportunities for Aldec with design teams who traditionally would not invest in high-performance VHDL and Verilog simulation. Altium Designer's very broad user base and its FPGA vendor independence allow more designers to leverage Aldec simulations technology as part of Altium Designer's unified architecture."
As still another sign of the high level of activity in the EDA and the Electronics IP marketplace, we recall the May 13, 2010 news when Cadence Design Systems, Inc. of San Jose, CA and Denali Software, Inc. of Sunnyvale, CA (portraying itself as a “provider of electronic design automation (EDA) software and intellectual property (IP)” announced that the companies had entered into a definitive merger agreement under which Cadence would acquire Denali for $315 million in cash. In alignment with its EDA360 strategy, this transaction was said (when completed) to allow Cadence's solution portfolio to deliver system component modeling and IP integration. "Denali's strengths in Memory Models, Design IP, and Verification IP will accelerate the execution of Cadence's recently announced EDA360 vision, creating new opportunities for the company," said Lip-Bu Tan, president and chief executive officer of Cadence. "Bringing our two companies together will provide a path for future growth, as well as expanded opportunities for our customers and employees," said Sanjay Srivastava, president and chief executive officer of Denali.
Then on June 17, 2010 Cadence announced that it had successfully completed the acquisition of Denali Software. "We envision a way forward for the electronics industry, called EDA360 that addresses the emerging shift to applications-driven systems and SoC Realization. Our customers' needs are changing, and EDA providers must respond with their own EDA360 initiatives. The acquisition of Denali gives Cadence a significant, first-mover advantage as we execute our strategy," claimed Lip-Bu Tan, president & CEO of Cadence. The Denali team, including founders Sanjay Srivastava and Mark Gogolewski, will report to Nimish Modi, senior vice president, research and development, Front End Group, Cadence.
On June 14, 2010 Magma® Design Automation announced it was set to join the broad-market Russell 3000 Index as Russell Investments reconstituted its comprehensive set of US and global equity indexes on June 25, according to Russell's preliminary list of additions published June 11. Annual reconstitution of Russell's US indexes captures the 4,000 largest US stocks as of the end of May, ranking them by total market capitalization. Membership in the Russell 3000, which remains in place for 1 year, means automatic inclusion in the large-cap Russell 1000 Index or small-cap Russell 2000 Index as well as the appropriate growth and value style indexes. Russell determines membership for its equity indexes primarily by objective, market-capitalization rankings and style attributes.
"Membership in the Russell indexes represents another milestone in Magma's comeback story," said Rajeev Madhavan, Magma chairman and chief executive officer. "It recognizes the jump in Magma's market capitalization over the past year as the advantages of our technology are increasingly recognized by the semiconductor industry and product adoption increases."
On June 28, 2010 Mentor Graphics Corporation announced that it would offer webcasts of 22 technical sessions that it had presented at the recent 47th Design Automation Conference in Anaheim, California. Sessions will be offered July 13-15 and July 20, 2010 via online webinars with a Mentor spokesperson available for live Q&A sessions immediately afterwards.
Who: Various presenters from Mentor Graphics product divisions
What: Webcasts of technical suite sessions
Tuesday, July 13 - Thursday, July 15 and Tuesday, July 20.
Registration and a full schedule of presentations can be found at:
As described in the following EDA News Highlight, EDA “Big 3” member Synopsys will soon acquire Virage Logic, just as Big 3 member Mentor Graphics acquired IP vendor LogicVision last summer. The third member of the Big 3, Cadence is also active in the IP realm, announcing in May 2010 that it had entered into a definitive merger agreement with Denali Software, Inc. in which Cadence would acquire Denali for $315 million in cash (see June 4, 2010 Electronics IP Industry Commentary, or the news highlight under the Cadence logo above). The acquisition of Denali by Cadence has been completed, as announced June 17. On June 10, 2010 Synopsys, Inc. and Virage Logic Corporation announced that they had signed a definitive agreement for Synopsys to acquire Virage Logic. Synopsys said that Virage Logic's offerings will complement Synopsys' DesignWare® interface and analog IP portfolio by adding embedded memories with test and repair, non-volatile memories (NVMs), standard cell libraries, and programmable cores for control and multimedia sub-systems. With this acquisition, Synopsys will add to its ability to help design teams achieve their system-on-chip (SoC) development goals by providing them with a more comprehensive portfolio of production-proven, high-quality IP and worldwide technical support.
Assuming consummation of the terms of the agreement, Synopsys will pay $12.00 cash per Virage Logic share, resulting in a transaction value of approximately $315 million, or approximately $289 million net of cash acquired. The transaction is still subject to regulatory and Virage Logic shareholder approval, as well as other customary closing conditions.
The boards of directors of both companies have already approved the transaction, under which current Virage Logic President and CEO Alex Shubat will join Synopsys. After the closing, Virage Logic will become part of Synopsys, and Virage Logic stock will cease trading. The transaction is expected to close in the fourth quarter of Synopsys' fiscal 2010 (i.e. between November 1, 2010 and January 31, 2011). Therefore, Synopsys anticipates the transaction will be neutral to its non-GAAP earnings per share in fiscal 2010, and accretive in fiscal 2011 (i.e. beyond January 31, 2011).
"With more functionality being integrated into a single device, high-quality IP continues to be key for enabling designers to reduce integration risk and speed time-to-market," said Dr. Aart de Geus, chairman and CEO at Synopsys. "Bringing Synopsys and Virage Logic together broadens our portfolio and builds on two very strong technical teams. It is also in line with what so many customers are looking to Synopsys to address: a way to quickly incorporate standard functions into their SoCs so they can focus on developing differentiated products."
"When I co-founded Virage Logic in 1996, it was with the belief that a semiconductor IP company could provide the technically superior building blocks that the industry needed to accelerate development of high quality, cost-effective end products," said Dr. Alex Shubat, president and CEO of Virage Logic."Today, the transition to a fabless, or 'fab-lite' model, coupled with the explosion in SoC product development costs at the advanced process nodes, has resulted in an escalating need by the semiconductor manufacturers for production-proven IP. By joining forces with Synopsys' impressive engineering team and by gaining access to their global channel, we will be able to accelerate the development and delivery of our broad product offering to help customers meet their design-for-profitability goals. I am excited to join Synopsys to further my original vision."
Also on June 10, 2010 Synopsys, Inc. announced it had acquired technology, engineering resources and other assets of Synfora, Inc., a provider of C/C++ high-level synthesis tools used to design complex systems-on-chips (SoCs) and FPGAs. The asset acquisition is said to strengthen Synopsys' position in system-level design and verification and enhances the company's FPGA-based prototyping solutions. Synfora's technology enables designers to create and synthesize IC building blocks starting from a description written in the C or C++ programming language. Customers who have adopted Synfora's tools are said to have experienced the benefits of the technology for their FPGA and SoC designs through integration with Synopsys' Synplify® Premier synthesis and Galaxy™ Implementation Platform.
The terms of the deal have not been disclosed.
On June 18, 2010 representatives of the 47th Design Automation Conference (DAC ), the-just-concluding conference devoted to electronic design and design automation, reported the preliminary DAC attendance figures for the week of June 13 through June 18 at the Anaheim CA Convention Center. Companies in the embedded and electronic systems level (ESL) spaces, as well as major foundries, participated at unprecedented levels in all aspects of DAC: on the exhibit floor, in the technical program, and in DAC's Management Day and Embedded/SOC Enablement Day.
“This was definitely a 'turnaround' DAC; the year the design ecosystem became a reality on the floor,” said Gary Smith, president of Gary Smith EDA. “Everyone I spoke to mentioned how well-qualified the attendees were this year. I think big companies from across the electronics spectrum sent their most knowledgeable engineers.”
“We were very pleased with the traffic that entered our booth this year,” commented Rob van Blommestein, director of marketing communications for SpringSoft, Inc. “Overall, this year's DAC exceeded our expectations.”
Preliminary attendance figures for the 47th DAC broke down as follows:
- Total full conference: 1554
- Total exhibit attendees: 3444 (24% international)
- Exhibitors, visitors, and guests: 2557
- Total Attendees: 6001
NOTE: The original goal was 8000 Total Attendees, per pre-show publications.
Indeed, Gabe Moretti reported in his July 7 EDA WEEKLY piece that the 6001 total (DAC) attendees was also down from recent years' DAC shows. Moreover, Gabe reported the following, “A more telling figure of the recession and the diminishing funds for academic research is the number of (DAC) full conference attendees. This number has been steadily decreasing every year, at least since 2006, regardless of the location of the conference, and this year the number was 1554. Still respectable but almost half the number of registrants in the same category in 2006.”
Gabe also added, “The number of journalists attending DAC continues to decrease. Attendance from both US based professionals and international reporters was less than last year. The lack of professional attendance made the Press Room seem underutilized.” Gabe also suspects that the number of financial analysts attending DAC 2010 was smaller than in previous years.
“The Executive Committee adopted a twin policy this year of ensuring that DAC stayed economically viable and, at the same time, ensuring that we had more decision-makers than ever in attendance,” said Sachin Sapatnekar, General Chair of the 47th DAC. “We were fortunate to achieve both objectives, and feedback from exhibitors and technical program attendees indicates that the level of interest on the floor was higher than it has been for several years. Many thanks to our sponsors, volunteers, exhibitors, and technical contributors: with your help and involvement, DAC continues to be the flagship event in our field.”
For general EDA interest, but especially if you missed attending DAC this year, you may be interested in checking out the EDAcafe Blogs:
While all entries are worthwhile, Graham Bell's fifty-four (54) video clips of brief interviews of DAC personnel, attendees and otherwise, are at once informative and revealing.
On Tuesday June 29, 2010 privately-held EVE, a leader in hardware/software co-verification, announced that it closed Q1 2010 on March 31 with record bookings of $19.9 million.
Since it began volume production in January 2010 of the ZeBu-Server, its new billion-gate fast emulation platform, EVE has received purchase orders from eight semiconductor companies, including both new and long-time users of ZeBu platforms. EVE added multiple new customers, including LG Electronics, Konica-Minolta, Fujitsu Microelectronics Solutions, and Nokia-Siemens Networks among others, as well as booking several repeat orders.
"We have been granted our wish to forget 2009 and the worst recession in history," emphasized Dr. Luc Burgun, EVE CEO and president, who added that Q1 2010 marked the beginning of a strong recovery. "The rapid ramp in ZeBu-Server orders over the first five months, some of which included multiple systems from long-time users of our ZeBu emulators, delivers another vote of confidence in the design and productivity of our state-of-the-art fast emulation systems."
NOTE: EVE was featured in a recent EDA WEEKLY article, “All About EVE,” published on EDACafe,com by the writer of this July 2010 EDA COMMENTARY:
The IMS 2010 show has come and gone, but Agilent EEsof EDA has already reserved space for next year and is looking forward to seeing customers and prospects in Baltimore in 2011!
The MicroApps sessions this year were better than ever with a keynote presented by Dr. David Root, a pioneer in X-Parameters* and Agilent Fellow.
If you missed the show or were not able to attend all of the MicroApps sessions, you can still get a copy of the nearly 60 papers on CD - while supplies last. Click on this URL:
Real Intent, Inc. presented and demonstrated its newest products for finding design bugs and DFT trouble spots -Ascent™ Lint and Meridian™ DFT at the 47th Design Automation Conference (DAC). It offered Expert Corner Lecture Series on advanced Clock Domain Crossing (CDC) verification and how to prevent X-related functional bugs in its booth . Real Intent executives also presented during DAC's Verification and Test Forum, participated in the Workshop for Women in EDA (WWEDA) and presented during the IEEE International High Level Design Validation and Test Workshop.
Real Intent, Inc. is a privately held electronic design automation (EDA) company that improves logic verification efficiency for its customers. Through unique application of formal techniques, the Real Intent suite of tools provide powerful solutions to important design problems, from the very beginning of the design cycle, to the end of the implementation cycle. Real Intent calls this: "Delivering Verification Confidence." In use at over 40 major customers worldwide, Real Intent tools help make the most complex designs in the world possible. Real Intent is headquartered at 505 North Mathilda Avenue, Suite 210, Sunnyvale, CA 94085, phone: +1 (408) 830-0700, fax: +1 (408) 737-1962, Web: www.realintent.com , e-mail: Email Contact
EDA Big 3 vs. MCAD Top 3 Vendors Q1 2010
In past Commentaries, we have compared the most recently reported quarter's revenues and net incomes of the Big 3 EDA vendors (Cadence, Mentor, Synopsys) to those of the Top 3 MCAD vendors (Autodesk, Dassault, PTC). (NOTE: These are the three vendors from each group that reported the most revenues in their respective groups, not necessarily the most earnings)..
For the nominal first quarter of 2010, the following totals apply:
EDA Vendor Q1 2010 Stock Performances
The first four columns of Table 3 below reveal that the combined total of the G4 stocks appreciated in value during the three calendar months of Q1 2010, but only by less than 1%. Meanwhile, both the NASDAQ and the DOW gained value in mid-single digit percentages. Both Cadence and Magma managed to add double-digit percentages to their stock prices during Q1 2010, but Mentor was down more than 9% and Synopsys was flat.
Turning to the last two columns in Table 3, one can see that over the course of the entire EDA G4 year April 2009 to March 2010, the G4 total stock value gained almost 32%; however, both the NASDAQ and even the DOW did better, the NASDAQ by a handy 15+ percentage points and the DOW by 11+.
So for both the three months ending March 31, 2010 and for the year ending March 31, 2010, the NASDAQ Composite did better (grew more) than the combined stock prices of the EDA G4.
*ALTIUM (ALU:ASX) shares priced in Australian dollars. Not included in totals.
EDA Vendor Q2 2010 Stock Performances
While this EDA Commentary is posted in early July 2010, and we are still months from learning the revenue and earnings of the EDA G4 for Q2 2010, we already have access to their stock performances for the second calendar quarter. Table 4 below reveals that the larger two Market Cap stocks (Cadence and Synopsys) both lost value during Q2 2010, at minus 13% and minus 3%, respectively, but neither lost as much percentagewise as the NASDAQ, which fell a precipitous minus 12%. On the other hand, Magma and even Mentor gained about plus ten percent each in value during Q2, both running counter to the general US economic downturn that occurred after the April 20 news of the Deepwater Horizon oil spill catastrophe.
In addition to the NASDAQ losing 12% in Q2, the S&P also lost 12%, and the Dow fell 10% as worry about sovereign debt in Europe and the sustainability of the US economic recovery after the oil spill caused investors to pull back from a peak hit in late April.
A look at the Q2 2010 stock chart immediately below from June 28 shows that Cadence (CDNS - blue line) slightly outpaced the NASDAQ (red line) through the quarter, but Cadence followed the decline of the NASDAQ after April 23, 2010 or so, with both Cadence and the NASDAQ closing lower than they began the quarter. Mentor Graphics (MENT - green line) followed its own path and managed to close higher than it began the quarter.
The chart below this paragraph exhibits the relative stability of Synopsys (SNPS - blue line), but Synopsys also nearly paralleled the NASDAQ (green line) and it too closed lower for the quarter.
While two days of price changes would not be discernable visually in multi-month charts like the above, the two days between June 28 and June 30 (the latter is the end date for Q2 used in Table 4) saw major drops in all four of the G4 stocks and in the NASDAQ, showing how volatile the markets were at the end of Q2 2010:
The following report was released subsequent to press time of the EDA Industry Commentary for July 2010:
On July 13, 2010 The EDA Consortium (EDAC) Market Statistics Service (MSS) announced that the Electronic Design Automation (EDA) industry revenue for Q1 2010 was $1247 million, a 4.6% increase compared to $1192.1 million in Q1 2009. Sequential EDA revenue declined 1.2% from Q4 2009, while over the last four quarters it declined 5.9%.
“Led by increases in the CAE and Semiconductor IP categories, the EDAC revenue numbers show an increase over Q1 2009,” said Dr. Walden Rhines, EDAC chair and chairman and CEO of Mentor Graphics.
“Geographically, the Asia/Pacific region showed growth both year to year and quarter over quarter.”
Companies that were tracked employed 26,099 professionals in Q1 2010, up 0.4% compared to Q4 2009, but down 1.7% from Q1 2009.
Revenue by Product Category
Computer Aided Engineering (CAE), EDA’s largest category, generated revenue of $458.5 million in Q1 2010. This represents a 7.2% increase over the same period in 2009. Over the last four quarters, CAE declined 3.5%.
IC Physical Design & Verification revenue decreased to $274.4 million in Q1 2010, a 9.2% decrease compared to Q1 2009. Over the last four quarters, IC Physical Design & Verification declined 8.3%.
Printed Circuit Board and Multi-Chip Module (PCB & MCM) revenue decreased 8.8% compared to Q1 2009, to $109.4 million. Over the last four quarters, PCB & MCM decreased 8.9%.
Semiconductor Intellectual Property (SIP) revenue totaled $320.9 million in Q1 2010, a 35.8% increase compared to Q1 2009. Over the last four quarters, SIP decreased 0.1%.
Services revenue was $83.7 million in Q1 2010, a decrease of 20.7% compared to Q1 2009. Over the last four quarters, services decreased 21.7%.
Revenue by Consuming Region:
The Americas, EDA’s largest region, purchased $492.9 million of EDA products and services in Q1 2010, representing a decrease of 0.2% compared to Q1 2009. Over the last four quarters, the Americas were down 5.5%.
Revenue in Europe, the Middle East, and Africa (EMEA) was up 0.5% in Q1 2010 compared to Q1 2009 on revenues of $224.2 million. Over the last four quarters, EMEA was down 13.1%.
First quarter 2010 revenue from Japan decreased 1.9% to $250.8 million compared to Q1 2009. Over the last four quarters, Japan decreased 9.1%.
The Asia/Pacific (APAC) region increased to $279.0 million in Q1 2010, a 33.2% increase compared to the same quarter in 2009. Over the last four quarters, APAC increased 7.0%.
The EDAC MSS Report:
The EDA Consortium Market Statistics Service reports EDA industry revenue data quarterly and is available by annual subscription. Both public and private companies contribute data to the report. Each quarterly report is published approximately three months after quarter close. MSS report data is segmented as follows: revenue type (product licenses and maintenance, services, and SIP), application (CAE, PCB/MCM Layout, and IC Physical Design and Verification), and region (the Americas, Europe Middle East and Africa, Japan, and Asia Pacific), with many subcategories of detail provided. The report also tracks total employment of the reporting company.
The EDA Consortium self description:
The EDA Consortium is the international association of companies that provide design tools and services that enable engineers to create the world's electronic products used for communications, computer, space technology, medical, automotive, industrial equipment, and consumer electronics markets among others. For more information about the EDA Consortium, visit www.edac.org, or to subscribe to the Market Statistics Service, call (408) 287-3322 or email email@example.com.
 Footnote: Why is a “nominal” first quarter used in the vendor by vendor comparisons in this EDA COMMENTARY? A nominal quarter system was adopted by Henke Associates for its COMMENTARIES years ago, to ensure consistency in reporting quarterly financial results from year to year, regardless of the decisions (within reason) of individual members of the chosen group in defining (and occasionally changing) when its fiscal years begin and regardless of when its fiscal quarters begin, compared to the universal constant of the yearly and monthly Gregorian calendar in common use today.
The EDA G5 vendors provide examples of the differences each has chosen for its current reporting of quarterly results for our “nominal” Q1 2010, in the Footnote Table F1 below:
The writer would like to acknowledge the sources of data and information for this Electronics Industry Commentary for July 2010: Vendor News Releases; Hoover's; Yahoo! Finance; Google Finance; and The SIA. Ongoing support by the team at IBSystems, Inc., including but not limited to Sanjay Gangal, Adam Heller, David Heller, Jon Heller, Nitai Fraenkel, and Sumit Singhal, is also appreciated.
About the Author of this July 2010 Electronics Industry Commentary:
Since 1996, Dr. Russ Henke has been and remains active as president of HENKE ASSOCIATES, a San Francisco Bay Area high-tech business & management consulting firm. The number of client companies for Henke Associates now numbers more than forty. During his corporate career, Henke operated sequentially on "both sides" of MCAE/MCAD and EDA, as a user and as a vendor. He's a veteran corporate executive from Cincinnati Milacron, SDRC, Schlumberger Applicon, Gould Electronics, ATP, and Mentor Graphics. Henke is a Fellow of the Society of Manufacturing Engineers (SME) and served on the SME International Board of Directors. Henke was also a board member of SDRC, PDA, ATP, and the MacNeal Schwendler Corporation, and he currently serves on the board of Stottler Henke Associates, Inc. Henke is also a member of the IEEE and a Life Fellow of ASME International. In April 2006, Dr. Henke received the 2006 Lifetime Achievement Award from the CAD Society, presented by CAD Society president Jeff Rowe at COFES2006 in Scottsdale, AZ. In February 2007, Henke became affiliated with Cyon Research's select group of experts on business and technology issues as a Senior Analyst. This Cyon Research connection aids and supplements Henke's ongoing, independent consulting practice (HENKE ASSOCIATES). Dr. Henke is also a contributing editor of the EDACafé EDA WEEKLY, and he has published nine (9) monthly articles since November 2009; URL's available.
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from HENKE ASSOCIATES,
please click on the URL below and scroll to the last entry on that page:
Since May 2003 HENKE ASSOCIATES has now published a total of ninety (90) independent COMMENTARY articles on MCAD, PLM, EDA and Electronics IP on IBSystems' MCADCafé and EDACafé. Further information on HENKE ASSOCIATES, and URL's for past Commentaries, are available at http://www.henkeassociates.net . March 31, 2010 marked the 14th Anniversary of the founding of HENKE ASSOCIATES.
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