This is the August 22, 2011 edition of the EDA WEEKLY, entitled, “ The State of Electronics IP in a Volatile Economy. ”
Herein we return our attention to the phenomenon of the rise of Intellectual Property in the world’s Electronics Industry, a segment of Electronic Design Automation (EDA) that Henke Associates began reporting on separately in 2003. Indeed, for the entire period 2003 through 2010, separate issues of the Electronics Design Automation (EDA) Commentaries and Electronics Intellectual Property (IP) Industry Commentaries were posted quarterly on EDACafe.com.
Starting in 2011, the EDA WEEKLY attempted to adopt a new tradition of publishing a consolidated report each quarter that combined the two segments of EDA and IP into one posting. That new tradition met with only limited success, as the two electronics segments were combined and posted together only twice out of three tries to date in 2011.
Once again it appears necessary, for timing and logistical reasons, to separate the reporting of the two segments only eight months into the new mission. The quarterly reporting practices of the two vendor groups IP and EDA are different in themselves, and when added to the variable available dates for EDA WEEKLY postings, it’s possible that financial results for one group could be reported over two months in arrears of their actual releases by the involved vendors. Moreover, the length of the combined postings forced us to forego the latest news sections, which many readers had coveted.
Other combinations will appear in future as well. For example, in the September 19, 2011 EDA WEEKLY, not only will the G5 EDA vendors be covered for their nominal Q2 2011 financials, but also the G5 MCAD/MCAE vendors will be likewise included.
So we will separate the two segments once again this month, focusing in this issue on the Group of Five (G5) Electronics IP players, each of whom reported their Q2 2011 financial results individually between July 21, 2011 and August 04, 2011.
Which brings us to the second part of the title to this piece – the “Volatile Economy” part. For as you are certainly well aware by now, a significant percentage of the days in the July 21 to August 04 IP vendor reporting period mentioned above would surely be characterized as occurring in a volatile economic period in the United States and abroad. The volatility continued well beyond August 04, 2011 and is likely to last quite awhile, despite occasional periods of 3 or 4 consecutive days of relative calm.
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Also: Posted anew every four weeks, the EDA WEEKLY delivers to its readers information concerning the latest happenings in the EDA industry, covering vendors, products, finances and new developments. Frequently, feature articles on selected public or private EDA companies are presented. Brought to you by EDACafe.com. If we miss a story or subject that you feel deserves to be included, or you just want to suggest a future topic, please contact us!
The Electronics IP Group of Five (G5) Q2 2011 Reports
Henke Associates had selected eight (8) publicly-traded companies originally (called the "Group-of-8" or "G8"), as representative of the financial state of the nascent Electronics IP industry circa 2003. At the end of 2004, ARM completed its acquisition of Artisan Components, Inc., thereby reducing the "G8" to "G7". In August 2009 Mentor Graphics completed its acquisition of LogicVision, thereby reducing the “G7” to “G6”. Then on June 10, 2010 Synopsys announced that it would acquire Virage Logic, a transaction that was completed on September 2, 2010.
Accordingly, below are listed the five Electronics IP vendors which will be covered in the sequel, for Q2 2011:
As always, we will begin with summary charts of revenues and earnings, followed by individual financial summaries on each G5 IP vendor in turn. Recent stock performances will also be included, which is where the seldom-witnessed volatility of the current economic climate has the most impact.
Finally, some news items related to each of the G5 Electronics IP vendors, and/or other IP topics in general, will be presented.
Enjoy if you can!
The Electronics IP G5 Results for Calendar Q2 2011
We begin our review of the Q2 2011 Electronics IP G5 performances by looking at the G5 Electronics lP Revenue Summary ( Table 1 ) below.
As a group of five vendors (the IP G5), the modest Q2 2011 revenue improvements of ARM, CEVA and Rambus were enough to propel the total revenue for the IP G5 to a small increase over just-prior Q1 2011, although the total sequential revenue gain was less than 2%. However, the Q2 2011 revenue performances by the same three vendors over Q2 2010 were healthy enough to propel the entire IP G5 to more than a 28% year-over-year total quarterly revenue enhancement.
Indeed, the G5 Q2 2011 revenue Sum of nearly $292 million was the second best of the five quarters displayed in Table 1, second only to the propitious anomaly of Q4 2010, (when the Rambus royalties’ windfall positively distorted the revenue Sum above $300 million for that quarter).
While ARM’s still-positive quarter to quarter revenue growth has shriveled to single-digit percentages, the revenue distinction among the five IP vendors continues, with two dominant vendors and three runners up.
ARM’s strength is once more on display, with
Rambus’ sinusoidal revenue still number two. While the business models of each these two vendors are dramatically different, together that “odd couple” again in Q2 2011 took some seven-eighths of the IP revenue Sum, leaving the last eighth or so to divide among the bottom three companies.
Ah, the bottom three. The revenue numbers for Q2 2011 indicate that while second smallest, CEVA is growing and may soon pass 3rd place MIPS, whose revenue is declining. Tiny MoSys for now is already less than a fourth the revenue of 2nd smallest G5 member CEVA and furthermore, MoSys revenue continues on a slightly negative trend pending some breakthrough.
While quarter to quarter profit growth even for ARM is not completely steady, ARM holds the distinction of being the only vendor with all black numbers in earnings in this quarter’s Table 2 below. And of course, none of the other IP G4 runners up can come close to ARM’s 4-quarter earnings totals.