The EDA & Electronics IP Almanac: Q1 2011


In January 2011 the EDA WEEKLY adopted a new tradition that replaced the previous 2003 through 2010 practice of posting separate issues of the Electronics Design Automation (EDA) Commentaries and Electronics Intellectual Property (IP) Industry Commentaries on Starting in 2011, the EDA WEEKLY would publish a consolidated report each quarter that combines the two segments of EDA and IP into one posting.

In January 2011, the new tradition began with breaking the new tradition, at least partially, because two separate articles a week apart were needed to cover the two segments: January 10, 2011 Schedule A, which covered the Group of 5 (G5) EDA vendors’ Q3 2010 financial results, followed on January 17, 2011 by Schedule B, which discussed the Q3 2010 financials of the G5 Electronics IP players.

Then on April 04, the EDA WEEKLY succeeded at last in covering both sets of results for Q4 2010 in a single posting, cleverly entitled, “The EDA and the Electronics IP Almanac: Q4 2010.” Check it out at the following URL, but first bookmark the current article so it’s easier to return:

The Vendors discussed in that April 04, 2011 issue were:

The vendors named in the group of ten listed above, evolved from a longer list of companies originally selected for coverage. For the quarterly EDA Industry Commentaries published in starting in May 2003, Henke Associates chose nine (9) publicly-traded entities: Altium, Ansoft, Cadence, Magma, Mentor Graphics, Nassda, Synopsys, Synplicity and Verisity.

Subsequently, Verisity and Nassda were 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 appeared in the EDA Industry reports.

So most recently, the EDA Group was down to five vendors.

On the Electronics IP side, 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 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 and Virage Logic announced that Synopsys would acquire Virage Logic. This transaction was completed on September 2, 2010.

Accordingly, the Electronics IP Group was also down to five vendors.

Are you following all this?

More recently, as explained in the EDA WEEKLY of May 02, 2011, SpringSoft was added to the “EDA G5 list” of EDA vendors covered, temporarily making the list the ”EDA G6 list”:!

However, by removing Altium Limited from the formal EDA list for the foreseeable future, the EDA list for coverage going forward will continue to be five vendors in length.

Structure of the presentation in this June 27, 2011 issue:

The two Groups of vendors, five in EDA and five in Electronics IP, will be reported separately herein. Each group will begin with summary charts of revenues and earnings, followed by individual financial summaries on each vendor in turn. Recent stock performances will also be included.

Finally, some comparisons among all TEN vendors will be presented.



The EDA G5 Results for Nominal Q1 2011

As always, we begin our EDA review by looking at the summary Revenue List of the most recently reported quarter; this time it’s the nominal Q1 2011 EDA G5 vendor performances (Table 1) below. Note that SpringSoft has been added to Table 1 for the first time, together with its revenue history stated in $US; Altium has been removed from the G5 for the time being; and all group totals have been updated accordingly.

While several of the G5 vendors (Cadence, Magma, and Synopsys) enjoyed nominal Q1 2011 sequential revenue totals greater than their respective traditionally-strong Q4 2010 revenues, the total G5 Q1 2011 revenue figure of $946 million and change, was lower than Q4 2010‘s total of almost $975 million, but only ~3% less.

Indeed, Q1 2011’s total revenue ($946+ million) beat its year over year counterpart Q1 2010 total ($789+ million) by almost 20%! All G5 vendors scored double-digit percentage revenue improvements YOY.

As predicted in this space 3 months ago, Mentor Graphics’ Q1 2011 endured a fall from a giant revenue cliff of 25% less than its record-high revenue total reported in Q4 2010. MGC’s stay in the “Over $300 million Quarterly Revenue Club” was short-lived, as Synopsys reclaimed its exclusive membership in Q1 2011, exclusive at least for awhile.

For as the 2007-2008 Recession recedes, a number of the EDA G5 vendors will inevitably come-a-knockin’ at the door of the “$300 million in quarterly revenue club.” By then, however, Synopsys will have matriculated to the even more exclusive $400 million a quarter club, joining the rarified environs occupied by the likes of MCAD vendors Autodesk and Dassault Systemes (Oops...those last two vendors are already ensconced in the “$500 million a quarter” club!); see Footnote [1].

1 Notice that these Table 1 columns above calculate the percentage of one quarter over the other, as labeled, whereas in Table 2 below, the relevant columns provide the numerical dollar differences in earnings between two different quarters as labeled.

Turning to earnings in Table 2 below, we observe that Mentor Graphics also relinquished its temporary one-quarter leadership position in net income, falling some $51+ million back into red ink in Q1 2011 from its lofty but temporary Q4 2010 perch of $49+ million in black ink.

And there to reclaim the earnings title for Q1 2011 was the perennial profit champion Synopsys. Not only that, but Synopsys’ net of $81+ million represented over 88% of the entire EDA G5 total net income of $91.54 million in Q1 2011!

Every member of the G5 save MGC was in fact in black ink in Q1 2011, but the three vendors other than Synopsys that produced a profit each delivered only single digit millions. Moreover, every one of the G5 did better in absolute profitability in Q1 2011 than they did a year ago in Q1 2010, leading to a G5 YOY total improvement of $84.52 million in net income (the figure in the lower right hand corner of Table 2).

1 Notice that Table 1 columns far above calculate the percentage of one quarter over the other, as labeled, whereas in Table 2 just above, the relevant columns provide the numerical dollar differences in earnings between two different quarters as labeled.


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