Money matters: It’s an IP, IP, IP, IP World

Fifty years ago, you would have known that it was a Mad, Mad, Mad, Mad World. Today, however, it’s an IP, IP, IP, IP World. Should you choose to cling to any skepticism about this state of affairs, here’s how to get over it.

Below you’ll find a very rough set of numbers [gleaned from Yahoo Financials] that look at the stock valuations of four companies that Play Large in the world of EDA and IP.  You’ll see posted there, a compare/contrast of the corporate performances of Mentor Graphics, Synopsys, Cadence, and ARM over the last 1 year, 2 years, and 5 years.

Remember back to the summer of 2008? The sky was falling, the world’s economy was  hell-bent on reaching the brink of cataclysmic collapse, and although Cadence was aggressively going after Mentor Graphics, the company was in truth only a handful of weeks away from a complete collapse of its own, the dismembering of the executive team in mid-October 2008.  Given the drama of that time, could we have predicted where we would be today?

Maybe. Maybe not. Forgive yourself if you couldn’t read the tea leaves.

But examining the results below reveals that had you chosen to be a cock-eyed optimist in 2008 rather than a steely-eyed pessimist, gone with faith over fact, voted for cyclical patience rather than End of Days paranoia – if you had invested in any one of the Big Three EDA companies in 2008, over the last five years, Mentor Graphics would have delivered up a respectable 45% return on your investment, Synopsys a credible 56% return, and Cadence a very commendable 109% return.

In other words, good on you if you turned your back on pessimism in 2008 and knew to ride the wave. But bad on you if, at the same time, you failed to appreciate the promise and potential of IP, because that’s where the real monster win has been over the last 5 years. Check out the numbers.

If you had put your money on ARM back in 2008, as the global economy was tip-toeing towards the cliff, your returns would have been nothing less of monumental. If you had put your money on ARM back in 2008, you would have garnered just short of a 600% return on your investment!

Wow. And you wonder why those guys in Cambridge are always smiling.  Well, why shouldn’t they? They’ve known for a long time that it would come to this. It was only a matter of time.

It is indeed here in 2013 an IP, IP, IP, IP World.

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From Yahoo Financials …

MENT
* 1 year, $15/share to $20 = 33% ROI
* 2 years, $11.5 to 20 = 70%
* 5 years, $14 to $20 = 45%

SNPS
* 1 year, $31 to $37 = 19.5%
* 2 years, $24 to $37 = 47%
* 5 years, $24 to $37 = 56%

CDNS
* 1 year, $12 to $15 = 24%
* 2 years, $9.5 to $15 = 51%
* 5 years, $7 to $15 = 109%

ARMH
* 1 year, $26 to $41 = 56%
* 2 years, $28 to $41 = 35%
* 5 years, $6.5 to $41 = 592%

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From 1963 …

It’s a Mad, Mad, Mad, Mad World

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Tags: ARMH, CDNS, Mad Mad Mad Mad World, MENT, SNPS

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