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Commentary:
EDA Industry Update March 2009 -- What did the Last Quarter Bring?
by Dr. Russ Henke and Dr. Jack Horgan
Henke Associates
In the May 2003, December 2003, February 2004, August 2004, December 2004, February 2005, May 2005, August 2005, December 2005, February 2006, May 2006, August 2006, December 2006, February 2007, May 2007, August 2007, November 2007, March 2008, June 2008, September 2008 and December 2008 EDA Commentaries by the authors (published on EDACafé.com), 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.
Note: As part of continuing EDA industry consolidation, two previously-selected EDA vendors, namely Verisity and Nassda, had been acquired by others and hence were dropped from the authors' quarterly EDA Commentaries. More recently, EDA vendor Synplicity was acquired by EDA vendor Synopsys, and EDA vendor Ansoft was acquired by MCAE vendor ANSYS. Consequently, both Synplicity and Ansoft will no longer independently appear in these EDA Industry reports.
This March 2009 report covers the performances of the remaining five EDA vendors for the nominal Fourth Quarter and the Calendar Year of 2008. In this issue, EDA News Highlights are followed by the revenue & earnings performances of the selected group of EDA players for Q4 2008, and then EDA vendor by vendor details. This is followed by the revenue and earnings performances for the calendar year and then for five years. EDA Vendor stock prices are discussed. Finally, individual EDA vendor forecasts for Q1 2009 are provided. Enjoy!
Recent EDA Industry News Highlights:
On February 23, 2009 Tela Innovations announced it had acquired Blaze DFM, a supplier of technology to reduce power in advanced manufacturing process nodes. The acquisition brings Blaze DFM’s line of products and technologies, including Blaze MO™ power-optimization technology, into the Tela portfolio. Key engineering personnel from Blaze DFM will join Tela Innovations to enable continuity of product development and support of customers.
On February 22, 2009 SpringSoft announced that it had signed a definitive agreement to acquire all the outstanding shares of Certess, Inc., creators of the Certitude™ Functional Qualification solution. Certess employs 20 people primarily in France and the United States.
On February 2, 2009, the Semiconductor Industry Association (SIA) reported that global sales of semiconductors were severely impacted by the world-wide economic turmoil in 2008, resulting in the first year-on-year drop in sales since 2001. Total sales for 2008 were $248.6 billion compared to $255.6 billion in 2007, a decrease of 2.8%.
As with the US jobs situation, the end of 2008 was far worse for semiconductor sales than the beginning of 2008. Semiconductor sales fell from $22.3 billion in December 2007 to $17.4 billion in December 2008, a whopping decline of 22%. Also, December sales had declined by 16.6% from November 2008, when sales were $20.9 billion.
SIA President George Scalise said, “The global economic recession severely dampened semiconductor sales in the fourth quarter of 2008, historically a strong quarter for the industry. Weakening demand for the major drivers of semiconductor sales -- including automotive products, personal computers, cell phones, and corporate information technology products - resulted in a sharp drop in industry sales that affected nearly all product lines.”
Scalise added, “As consumers worldwide drive over 50% of demand for semiconductors, the fortunes of the chip industry are increasingly linked to macroeconomic conditions such as GDP, consumer confidence, and disposable income. Sales of electronic products held up reasonably well during the first nine months of 2008, but fell sharply as turmoil in the global financial industry unfolded.”
See more on the economic turmoil of 2008-09 toward the end of this COMMENTARY, where EDA stock prices are discussed.
How did the EDA Vendors fair during the Fourth Quarter of 2008?
As shown in Table 1, the combined revenue performance of the five covered EDA firms for the 2008 fourth quarter was $854 million, a major decrease of 24% from the $1,215 million in the fourth quarter of 2007, but a slight increase of 4.3% from the $819 million in the just prior 2008 third quarter. NOTE: The forecast for Q4 for the 5 covered vendors’ combined revenue was stated at minus 23% in the EDA Commentary of December 2008.
Cadence endured the steepest absolute quarterly revenue decline year-over-year at minus $230,608,000. Cadence also suffered the largest quarterly percentage revenue decline from last year at minus 50%, followed closely by Magma at minus 45%. Mentor also witnessed a year-over-year loss at minus 14.8%. On the other hand, Altium and Synopsys enjoyed Q4 growth over last year at plus 14.8% and plus 7.7%, respectively.
On a sequential basis, Mentor Graphics saw a percentage revenue increase of 31% and Altium over 12%. Magma suffered the largest revenue drop (minus 16%) from the just preceding quarter, but Cadence and Synopsys also reported small revenue dips relative to the prior quarter.
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Figures 1 and 2 below provide additional quarterly revenue comparisons among vendors. In Q4 2008 Synopsys created the largest relative market share at 39%. At 28%, the traditionally third place finisher Mentor Graphics narrowly nudged out Cadence at 27% for the second spot (thereby regaining a temporary revenue lead over Cadence not seen since the early 90’s).
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Turning warily to earnings performances in Q4 2008, Table 2 shows that the EDA group of 4 that reported quarterly income, delivered a reported combined loss of $1.633 million. (This monstrosity of a loss compares to a combined net gain of $195 million in the year ago quarter, and to a net loss of $226 million in the just previous quarter. The combined Q4 2008 loss of the 5 covered vendors was dominated by Cadence’s loss of $1.639 billion which included $1.316 billion in impairment of good will. Synopsys steady black ink and Mentor’s return to profit in Q4 2008 were no match against the massive Q4 red ink of Cadence and Magma. (In Magma’s significant Q4 loss of $78 million, again there was a $60.8 million goodwill impairment charge).
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Company by Company Q4 2008 details:
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On February 26, 2009 Altium reported on the financial results for its half-year ended December 31, 2008. Total revenue for the most recent quarter was $13.7 million, a nearly 15% increase from the $11.9 million in the same quarter a year ago and over a 12% increase from the $12.2 million in the previous quarter.
Revenue from the Americas accounted for 40%, from Europe for 29%, from AP 9%, from China 21% and from consulting just over 1%. See Table 3.
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Net profit after tax for the half-year was $740,000 compared to a net loss of $1.9 million a year earlier.
Nick Martin, Altium CEO, said, "We are pleased to report a return to profitability, and to be able to declare an interim dividend to shareholders based on these half-year results.”
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On February 4, 2009 Cadence Design Systems, Inc. reported financial results for the fourth quarter and the year, the periods ended December 31, 2008. Total revenue for the quarter was $227 million, a drop of 50% from the $458 million in the fourth quarter of 2007 and a dip of 2.2% from the $232 million in the 2008 third quarter. Product revenue was $94 million or 41.5% of total revenue, a drop of 71% from the $328 million in the year ago quarter, but a rise of 5.7% sequentially. Maintenance revenue was $98.4 million accounting for 43% of the total. This was a decline of 1.2% year-over-year but an increase of 6.9% from the preceding quarter. Services revenue was $34.7 million or 15% of total revenue. This was up 16% from the prior year and also up 5.7% from the previous quarter.
On a geographic basis North America accounted for 45% of total revenue, Europe 22%, Japan 18% and the rest of Asia 15%. See Table 4.
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In terms of product segments Functional Verification accounted for 17% of total revenue, Digital IC Design for 26%, Customer IC for 23%, DFM for 7%, Systems Integration for 12% and Services for 15%.
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Net loss for the quarter was $1.639 billion, including $1.316 billion in impairment of good will. This compares to net income of $119 million in the year ago quarter and to a net loss of $169 million in the prior quarter.
Lip-Bu Tan, President and Chief Executive Officer, said, "While Cadence faced many challenges in 2008, we continue to develop and deliver quality products for our customers. During 2008, we refreshed each of our major product platforms. We also made a number of important decisions in 2008 to position Cadence to build long-term shareholder value. Among the most important were the transition to a 90/10 ratable model and a significant restructuring."
"We made very good progress in Q4 toward our goal of a stable 90/10 ratable model with over 85 percent of orders booked under ratable licenses," added Kevin S. Palatnik, Senior Vice President and Chief Financial Officer. "And, the restructuring we announced in November is on track."
NOTE: The “Saga of Cadence in 2008” was included by the authors in the December 2008 EDA Commentary, available at this URL:
http://www.edacafe.com/PDFs/EDAQrtly_3Q08.pdf
A “Cadence Saga” update circa February 22, 2009 may be found at this URL:
http://cofes.com/Blogs/tabid/272/EntryId/215/A-Cadence-Update-02-22-09.aspx
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On February 26, 2009 Magma Design Automation Inc. reported financial results for its fiscal 2009 third quarter, ended February 1, 2009. Total revenue for the quarter was $30.7 million, a giant drop of 45% from the $55.7 million in the same quarter a year earlier, and a decline of almost 16% from the $36.4 million in the preceding quarter. However, the $30.7 million in the quarter was above the guidance range given last quarter. License revenue was $13.1 million, or 43% of total revenue. This represented a decline of 63% year-over-year, and a decline of almost 34% sequentially. Bundled revenue was $8.2 million or 27% of the total. This figure was 27% below the results in the same quarter last year, but 10% above the results in the previous quarter. Services revenue was $9.3 million or 30% of the total revenue. This was a 5.7% rise over the same quarter last year, and a 1.3% increase from the pervious quarter.
In quarter three, the percentage of revenue from backlog-related transactions was in the high 80s, as it was in quarter two, and Magma expects 90% or more of quarter four revenue to come from backlog.
During the quarter North America generated 68% of total revenue, Europe 14.6%, Japan 8.6%, and the rest of AP 8.9%. See Table 6.
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Magma reported an “estimated” net loss of $78.1 million for the quarter. This result was below the guidance range issued by the company on December 4, 2008, and compares to a net loss of “only” $5.9 million for the year-ago third quarter. Third quarter losses exceeded guidance because of an estimated $60.8 million goodwill impairment charge. As a result of the decline in stock price in light of the current adverse macroeconomic business environment on Magma's long-term financial outlook, Magma's market capitalization fell significantly below the recorded value of its consolidated net assets, resulting in the impairment charge. Magma is in the process of finalizing its asset impairment analysis and expects to report the final amount of the goodwill impairment charge and other impacted financial statement line items in its Form 10-Q to be filed with the SEC
Magma’s net loss in the just prior quarter was $26 million.
Rajeev Madhavan, Magma's chairman and chief executive officer, said, “Magma beat revenue targets in the third quarter, an accomplishment we're quite pleased with given the difficult macroeconomic environment. Customers face difficulty in this economy but continue to recognize the technology advantage Magma products offer for their business-critical designs."
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On February 26, 2009 Mentor Graphics Corporation reported financial results for the fourth quarter and the year. Total revenue for the quarter was $242 million, a drop of almost 15% from the $284 million in the fourth quarter of last year, but a 31% increase from the $185 million in the third quarter of 2008. Nevertheless, the $242 million was below the estimate of $270 million given last quarter. System and Software revenue was $158 million or 65% of the total, a decline of nearly 22% year-over-year but a 62% increase from the prior quarter. Revenue from services and support was $85 million, or 35% of total revenue, an increase of 1.7% from the year ago quarter, but a dip of 2.8% from the previous quarter.
Revenue from the Americas accounted for 40% of the total, from Europe 35%, from Japan 10% and from the Pacific Rim 15%, the same percentages as in the previous quarter. See Table 7.
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Revenue from Integrated System Design generated 20% of the total revenue, from IC Design2Silicon 35%, Scalable Verification 20%, New & Emerging 10% and Services 5%.
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Net income for the quarter was $31 million, a drop of 9.6% from the $35 million in the year ago quarter but a significant turn around from the net loss of $78 million in the prior quarter. The prior quarter included a $51 million tax expense.
Walden C. Rhines, chairman and CEO of Mentor Graphics, said, “Large accounts fared well in the quarter, with modest growth in the company’s top ten renewal contracts. This strength was significantly offset, however, by weakness in smaller transactions. For the year, our diversity of product line and breadth of served markets, as well as growth in newer product segments, helped sustain the business. In particular, automotive and design for manufacturing both showed solid growth for the year. Looking forward, we see the opportunity to take advantage of this period of weakness to help customers consolidate on Mentor’s leading design platforms.”
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On February 18, 2009 Synopsys, Inc reported financial results for the first quarter of fiscal 2009 that ended January 31, 2009. Total revenue for the quarter was $340 million, a 7.7% increase from the $315 million in the fourth quarter of 2007, but a 3.7% drop from the $352 million in the third quarter of 2008. The $340 million was towards the high end of the guidance range that Synopsys gave last quarter. TBL revenue was $285 million, accounting for 84% of total revenue, an increase of 6.4% year-over-year and an almost 20% drop sequentially. Upfront license revenue was $18 million, or 5.4% of the total. This was a 46% increase from the year ago quarter, and at the same time it was a decline of almost 30% from the previous quarter. Maintenance and Services revenue was $36 million, accounting for the remaining 11% of total revenue. This was up 3.7% from the prior year and up 0.5% from the prior quarter.
North American revenue accounted for 50% of the total, Europe for 14.5%, Japan for 20.6% and the rest of Asia Pacific for 15%. See Table 9.
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Revenue from Core EDA represented 75% of total revenue, from IP & Systems 9%, DFM 12% and Services 4%. See Table 10.
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On December 18, 2008 Synopsys, Inc. announced it had completed its acquisition of the CHIPit business unit of ProDesign, a provider of high-speed ASIC and SoC verification systems. CHIPit is a line of automated ASIC prototyping solutions that provides hardware-assisted verification throughout the SoC and ASIC project life cycles.
Net income for the quarter was $52 million, an increase of nearly 13% from the $46 million in the same quarter last year, and an increase of 13% from the $46 million in the previous quarter.
Aart de Geus, chairman and CEO of Synopsys, said, "Synopsys' first quarter was characterized by solid financial performance, continued technology momentum and visible customer success. While the recession has clearly deepened and we have seen signs of customer stress, we believe that Synopsys is well positioned to help our customers weather the storm, and to emerge an even stronger company as a result."
How Did the Covered EDA Vendors Perform for the Full Year 2008?
Cadence and Mentor Graphics both operate on financial years that correspond to the calendar year, while the other covered EDA firms do not. The data below represent the last eight reported quarters to give the closest apples-to-apples comparisons.
For the calendar year 2008 Altium reported total revenue of $69.2 million, a healthy increase of 23% from the $56 million generated in 2007. Americas’ revenue was responsible for 41% of the total, European revenue for 29%, Asia Pacific for 14%, China for 14% and Consulting for 0.7%. See Table 11.
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For the year 2008 Cadence registered total revenue of “only” $1.03 billion, a 36% drop from the $1.615 billion in 2007. Product revenue was $516 million, or 50% of total revenue, a precipitous drop of 53%. Maintenance revenue was $388 million, or 37% of total revenue, a rise of 0.9%. Services revenue was $133 million, an increase of 6%. For the year Cadence had a loss of $1.854 billion including a charge of $1.316 for impairment of goodwill in the fourth quarter. This compares to a net gain of $296 million in 2007.
For the year North America accounted for 45% of total revenue, Europe for 22%, Japan for 20% and Asia for 13%. See Table 12.
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For the year 2008 Functional Verification accounted for 22% of total revenue, Digital IC Design for 24%, DFM for 6%, Systems Integration for 9% and Services for 13%. See Table 13.
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For the calendar year 2008 Magma Design Automation created total revenue of $168 million, a drop of 20% from the $209 million in calendar 2007. North America accounted for 59% of total revenue, Europe for 17%, Japan for 13% and the rest of AP for 11%.
For the year Magma had a net loss of $126 million, compared to a net loss of $48 million in 2007. This year included a $60.8 million goodwill impairment charge.
For the calendar year Mentor Graphics managed total revenue of $789 million, a 10.3% drop from the $880 million in 2007. System and Software revenue was $447 million, or 57% of the total. This figure was down over 19% from the prior year. Services and support revenue was $341 million, up 5.3%.
Upfront Revenue was responsible for 70% of the total, Perpetual and Ratable were each responsible for 15%.
Table 14: America accounted for 40% of the total Mentor annual revenue, Europe 30%, Japan 15% and Pac Rim the last 15%.
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Mentor’s net loss for the year was $88 million, compared to a net gain of $29 million in 2007.
For the calendar year Synopsys’ total revenue was $1.35 billion, a 10% increase from the $1.22 billion in the previous four quarters. TBL was $1.14 billion, or 84% of revenue. Upfront license revenue was $77 million, or 5.7% of the total. Maintenance and services revenue was $141 million, or 10.4% of total revenue. All these figures are very healthy.
North American Synopsys’ revenue accounted for 50% of its total, Europe for 14.5%, Japan for 19.6% and the rest of Asia Pacific $15.5%. Table 16.
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For the calendar year Core EDA accounted for 75% of total revenue, IP & Systems for 8.6%, DFM for 11.6% and Services for 4.8%.
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Net income for the year was $196 million, a remarkable 28% increase from the net income of $154 million in the previous calendar year.
5 Year Performances
The revenue performances of four top EDA players are graphically displayed in the two Figures 3 and 4 below. The combined revenue of the firms over this time period is shown in Table 18 below. The second row shows the percentage change year to year. The impact of the recession of 2008 is clearly visible.
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Cadence had been the number one firm in terms of revenue from 2004 through 2007, but Cadence lost the crown to Synopsys in 2008. See Figure 4.
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EDA Vendor Stock Performance
As shown in Tables 19 and 20 and Figure 5 below, the combined stock prices for the EDA vendors fell in absolute terms 57% year-over-year and 32% from the previous quarter. The average drop was 42% from the corresponding quarter last year and an average drop of 22% from the just prior quarter. All the covered EDA vendors experienced significant 2008 year-over-year drops in stock prices. Magma suffered the steepest percentage decline at minus 89%, followed by Cadence at minus 78% and Mentor Graphics at minus 52%.
On a sequential basis, Magma again bore the largest percentage drop at minus 75%, followed by Mentor at minus 54% and Cadence at minus 46%.
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On a year-over-year basis all the stock indexes were also down substantially at nearly minus 38%. The tech heavy NASDAQ suffered the most at minus 40%. The average drop for the 4th quarter was minus 22%. See Table 20.
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Figure 6 depicts the steep EDA vendor stock price declines over the course of 2008. Mentor Graphics stock shot up temporarily (blue line) when Cadence made a bid to acquire the firm. The MENT stock came back to earth when the bid was withdrawn.
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Figure 7 below shows the behavior of the major stock indexes during 2008:
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MCAD Q4 2008 versus EDA Q4 2008
The detailed fourth quarter performances of a selected group of public MCAD Vendors have been provided in the authors' MCAD Commentary for March 2009:
http://www.mcadcafe.com/PDFs/MCAD_Commentary_4Q08.pdf
As Table 21 below reveals, the combined Q4 2008 revenue from the top three MCAD vendors was $1.234 billion, or 1.52 times the $809 million revenue from the top three EDA firms. On the earnings side, the Cadence loss of $1,638 million (includes $1.3 billion in good will impairment) dominates the scene. Autodesk also had a significant loss for the quarter.
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Keep in mind that Autodesk sells its products predominantly through valued added resellers and distributors. Dassault Systemes sells predominantly through IBM and its Business Partners and in some instances, notably SolidWorks, through VARs. Thus, if one were to count actual end-user purchases of MCAD products, the combined MCAD revenue total would raise the Big 3 MCAD dollar total substantially. On the other hand, Autodesk has not-insignificant revenue outside MCAD in AEC, GIS and Media/Entertainment. Also, remember that UGS, a leading MCAD vendor, is now part of Siemens and does not disclose its financial performance.
For calendar year 2008 the revenue for the top three MCAD vendors was $5.34 billion, or 1.68 times the $3.19 billion in revenue for the top three EDA vendors. On the earnings side, the MCAD vendors generated $549 million in net income compared to a net loss of $1.75 billion for the EDA firms. However, the latter was dominated by Cadence’s substantial loss of $1.85 billion.
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The Economic Collapse
An extensive essay on the collapse of the economy was included in the December 2008 EDA Commentary for interested readers. The economic and geopolitical events of 2001 – 2007 in general, and the events of 2008-to-date through December in detail, were covered.
However, the economic news since then has not improved.
Q4 2008 turned out to be the worst quarter of the year! The US economy at the end of last year contracted at a far faster rate than initially estimated, a US Bureau of Economic Analysis report released February 27, 2009 said. The decline in the country's gross domestic product in Q4 2008 was the worst since the 1982 recession, and indicates that the current recession has been even deeper than previously believed. Output fell 6.2% at an annualized rate in the fourth quarter of 2008, revised downward from a previous estimate of a 3.8% decline.
On March 6, 2009, more bad news was released by the US Labor Department. The nation's unemployment rate rose to 8.1% in February 2009, the highest since 1983, as employers chopped another 651,000 jobs. Both figures were (as usual) worse than analysts expected. And revised figures released March 6 showed even deeper payroll reductions in the prior two months: the economy lost 681,000 jobs in December 2008 and another 655,000 in January 2009. Since the recession began in December 2007, the economy has lost an incredible 4.4 million jobs.
This is now the reality: Jobs being cut and unemployment rising in virtually all sectors of the US economy and among virtually all demographic groups. At the same time, families’ housing values and retirement savings have been pummeled; fully 13.6 million Americans now owe more on their mortgages than their homes are worth, and retirement accounts have collectively lost more than $2 trillion in little more than a year. And by all indications, the worse is yet to come.
The U.S. is now in its deepest economic slowdown since the 1930's. Bush 43 and his administration bequeathed monumental problems for President Obama and the rest of us to overcome. The downward spiral has tremendous momentum and it’ll be very hard to reverse.
As a giant first step, President Obama and his fellow Democrats muscled a $787 billion Stimulus Bill through Congress in mid-February 2009, despite nearly universal Republican opposition, and despite the fact that 8 years of Republican policies (of deregulation, deficit spending, lower taxes, needless wars like IRAQ, etc.) were the very policies that got the economy in trouble in the first place. Worst of all, many Republican politicians have said that they are hoping that the now lawful Stimulus Bill fails, thereby hurting millions more Americans, just so that “the GOP might gain congressional seats in 2010.”
But the new Stimulus Bill is just one step. There are many, many more painful actions that still need to be taken, over years, by the government and by its citizens, to recover from the current economic mess.
Covered EDA Vendors’ Stock Prices Faired since the end of 2008
Below we survey the changes in covered EDA Vendors’ stock prices between December 31, 2008 and press time (March 10, 2009). By the way, March 10, 2009 was a rare day of market upticks; the Dow closed up 5.8% on the day, for example).
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Forecast Guidance from Individual EDA Providers
The combined forecast for the next quarter (from the four EDA vendors providing guidance) calls for a drop of nearly 8% from the corresponding quarter a year ago and a decline of 7.2% from the quarter just reported. Mentor is the most optimistic with a projection of 14.5% growth year-over-year, but this is still 15.5% below the current quarter. Magma is the most pessimistic with a forecast of 39% drop relative to the same quarter a year earlier, but over a 9% increase relative to the current quarter. Cadence foresees declines of 28% and nearly 10% year-over-year and quarter-over-quarter, respectively.
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Individual Company by Company Forecast Guidance
Altium did not provide guidance. CEO Nick Martin said, “Although we are seeing some slow down in customers' purchasing decisions connected to uncertainty created by the general economic outlook over the next 6-12 months, we anticipate a continued positive contribution to our profitability from a weaker Australian dollar.”
For the first quarter of 2009, Cadence expects total revenue in the range of $200 million to $210 million, this compares to $227 million in the quarter just reported and to $287 million in the same quarter last year. For the full year 2009, Cadence expects total revenue in the range of $830 million to $870 million, a drop of 18% compared to $1,038 million in 2008. Order levels for 2009 are expected to be in the range of $800 million to $850 million, resulting in a year-end 2009 backlog of approximately $1.8 billion. For 2009, the firm expects weighted average contract life to be in the range of three to four years. For the seasonal revenue pattern in 2009, they expect to generate 23% to 25% of annual revenue in Q1, 23% to 26% in Q2, 24% to 27% in Q3 and 24% to 28% in Q4.
As guidance for the next quarter, Mentor Graphics expects revenue in the range of $200 to $210 million, compared to $243 million in the quarter just reported and compared to $179 million in the same quarter a year ago.
For Magma's fiscal 2009 fourth quarter, ending May 3, 2009, the company expects total revenue in the range of $33.0 million to $34.0 million, compared to $30.7 million in the quarter just completed. For Magma's fiscal year 2009, ending May 3, 2009, the company expects total revenue in the range of $146 million to $147 million, a slight increase from the previous guidance range of $144 million to $146 million.
As guidance Synopsys expects revenue in the next quarter to be in the range of $332 million to $340 million, compared to $340 million in the quarter just completed and compared to $325 million in the same quarter last year. For fiscal 2009 Synopsys expects revenue to be in the range of $1.37 billion to $1.40 billion compared to $1.34 billion in the previous fiscal year.
EDA Consortium's Market Statistics
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On January 12, 2009, the EDA Consortium's Market Statistics Service (MSS) announced that the EDA industry revenue for the third quarter of 2008 declined 10.9% to $1,259 million, compared to $1,412 million in Q3 2007. Note that Q3 2008 closed nearly 6 months ago.
In the third quarter the CAE segment accounted for 37% of the total EDA revenue, IC Design & Verification for 23%, Semiconductor IP for 21%, PCB/MCM for 10.3% and Services for 8%. CAE and IC D&V declined in the vicinity of 20% while Services shot up 25%.
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For the third quarter of 2008 North America accounted 44% of total EDA revenue, Europe for almost 20%, Japan for 20% and Rest-of-World for 16%. Japan was the only region to show increased revenue. North America and Europe suffered low double digit year-over-year decreases.
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Walden C. Rhines, EDAC chair and Mentor Graphics CEO and chairman, said “Surprisingly high year-over-year growth in the services segment and a small increase in PCB design tools and Semiconductor IP were offset by declines in CAE and IC Physical Design & Verification, resulting in an overall decline for Q3, 2008. While the double-digit drop affected all regions except Rest of World (ROW), which showed only 1 percent decline, all regions except North America had a positive four-quarter moving average. This illustrates the sharpness of the decline in third quarter.”
Since the EDA Consortium reports lag by over three months, we won't know the total EDA revenue results for Q4 2008 and for the year till April or May of 2009.
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About the Authors:
Since 1996, Dr. Russ Henke has been 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. He 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).
An affiliate of the HENKE ASSOCIATES team since 2001, LA-based Dr. John R. (Jack) Horgan co-authored this MARCH 2009 EDA Commentary. Dr. Horgan's prior corporate career has included executive positions at Applicon, Aries Technology, CADAM and MICROCADAM, as well as a stint at IBM. Dr. Horgan is also an editor of EDAcafé Weekly.
Since May 2003 the authors have now published a total of seventy-five (75) independent 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, 2009 marks the 13th Anniversary of the founding of HENKE ASSOCIATES.
Inquiries for consulting assignments are currently welcome; contact via henkeassociates.net.
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