Introduction:

In January 2011 the EDA WEEKLY began a new tradition that replaced the previous 2003 through 2010 practice of posting separate Electronics Design Automation (EDA) Commentaries and Electronics Intellectual Property (IP) Industry Commentaries on EDACafe.com. 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, because two separate articles 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.

Readers can see Schedule A from this URL:

The current article covering the results of Q4 2010 is cleverly entitled, “The EDA and the Electronics IP Almanac: Q4 2010.”

The Vendors to be discussed in this issue are:

The vendors named in this group of ten evolved from a longer list of companies originally selected for coverage. For the quarterly EDA Industry Commentaries published in EDAcafe.com 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.

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.

Structure of the following presentation

The two Groups of Five vendors each in EDA and Electronics IP will be reported separately. Each G5 will begin with summary charts of revenues and earnings, followed by individual financial summaries on each vendor in turn. Recent stock performance will also be included. Finally, some comparisons among all ten vendors will be presented.

Enjoy!

The EDA G5 Results for Nominal Q4 2010

As always, we begin our EDA review by looking at the summary Revenue List of the latest quarter for which results are available. For this issue, this means the results for the nominal Q4 2010 EDA G5 performances (Table 1) below.

Once again, the latest quarter’s total revenue for the G5 ( $968+ million) is higher than the total for any other quarter in the Table.  When nominal Q3 2010’s $896 million was the latest total reported several months ago, Q3 also beat the revenue total of the just prior quarter by 12%. But Q4 2010 does Q3 one better; it overwhelms its 2009 shadow by almost 17% rather than just 14%.

Unlike in Q3 2010, however, the revenue hero in Q4 2010 was, surprisingly, Mentor Graphics!

While all of the G5 save Synopsys delivered Q4 sequential revenue increases over Q3 2010, Mentor Graphics blew the doors off in Q4 with a plus 29% effort, entering for its first visit the rarified “Top Hat Club” of $300 million quarters, where Synopsys has held court forever (it seems).

Indeed, Mentor celebrated its 30th birthday (April 2, 2011) by delivering a revenue sum for the last three quarters of nominal 2010 that exceeded the sum Cadence delivered over the same period. With over $307 million in revenue in Q4 2010, Mentor also glided to an easy victory in the race to eclipse its Q4 2009 revenue figure, posting a 30% improvement while its rivals were huddled between plus 10% and plus 20%.

But just as the ink is drying on the reports of Q4 2010’s feat, one asks, “Can Mentor repeat in Q1 2011?” Doubtful; the nominal Q4 2010 stretch run probably exhausted the team and its revenue backlog.  

Before fans start wondering about future repeats, however, Mentor gets to celebrate one other nominal Q4 2010 financial feat. For in the Q4 2010 earnings column, Mentor managed to nose out the perennial victor Synopsys for the best net income in the EDA G4 league, as Table 2 below reveals. While its absolute margin of victory was less than a million dollars in net income, Mentor won by delivering a phenomenal Q4 2010 earnings return on sales (ROS) of 16 percent vs. Synopsys’ excellent 13+ percent.

Meanwhile, “Q3’s earnings winner-with-an-asterisk” Cadence [1] slipped back into red ink in Q4 2010 to the tune of minus $37 million, a giant fall of over $163 million from its tax-benefitted plus $127 million earnings summit in sequential Q3 2010.

So despite the Q4 2010 heroics of Mentor and Synopsys, the EDA G4 at $61 million turned in its second-worst total net income of the year.

G5 EDA Vendor by Vendor Details for Q4 2010

Altium announces audited financial results for the half-year to December 2010

On February 23, 2011 Altium Limited (ASX:ALU) released its statement for the half-year ending December 31, 2010.

The half-year summary is as follows:

• Sales of US$22.1 million, an increase of 9% compared to the previous corresponding period

• Revenue of US$22.0 million, an increase of 1% compared to the previous corresponding period