First to Table 1 and the G5 Revenue Sum for Q3 2011: $326.74 million! Easily the largest revenue number in Table 1, due primarily to the 51%+ sequential revenue improvement by Rambus in Q3 2011 compared to Q2 2011. Indeed, the most recent quarter Q3 2011 came in some $17 million higher than the Q4 2010 Sum of $309.87 million, the most recent prior quarter in Table 1 when Rambus’ revenue was approaching $100 million. This mention of Rambus, of course, is not meant to ignore ARM, the behemoth that brought in 2.33 times the revenue in the last four quarters than did Rambus.
While ARM and Rambus revenues continue to dominate those of the remaining three G5 IP players by a huge factor, we’d be remiss if we ignored CEVA’s YOY revenue growth (Q3 11 vs. Q3 10) of some 39%, second only to…shucks…Rambus again, which delivered a massive 216% more in revenue than it did last year for Q3.
But CEVA is growing rapidly, and may soon pass MIPS, whose revenue continued to decline again in Q3 2011, at a falling revenue rate exceeding a million dollars per quarter for the last four quarters. But tiny MoSys keeps MIPS from the bottom of the G5 revenue chart, with MoSys declining revenue now standing at just $2.11 million for the third quarter of 2011. Moreover, Table 2 will reveal that MoSys is also running up massive losses on its income line totaling nearly $25 million in losses for the last four quarters. And MIPS is approaching red ink as well, and needs an immediate revenue turn-around or cost reduction to stay in the black).
But before we delve into the G5 profit picture too far, let's stay on the revenue chart of Table 1 a little longer. 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 Q3 2011 took some seven-eighths of the IP revenue Sum, leaving the last eighth or so to divide among the bottom three companies.
When one considers both Tables 1 and 2, ARM’s financials are indeed remarkable and serve as a model for all the G5 IP companies (or even for EDA and MCAD/MCAE vendors). Table 2 (below) reveals (a) that ARM’s net income exceeded $50 million in Q3 2011, and (b) that ARM sports all black numbers across the top row of Table 2. Moreover, the bar graph labeled “ARMH Graph I” shows that 2011 is not a new phenomenon:
Overall, Table 2 still shows lots of red; indeed, once again 40% of the entries in the IP G5 earnings table are in red font this third quarter of 2011. The earnings Tables 2 in both the two prior quarters (Q1 and Q2 2011) also sported an even 40.0% of red numbers.
Table 2 above also shows that in Q3 2011, despite reaching nine figures of revenue, Rambus ended up in Q3 2011 with precious little net income to show for it [+$478,000]. Again, nothing new here; Rambus’ business model simply marches to the beat of a different drummer; look at RAMBUS (USD) Graph V below:
The remaining three Google Finance graphs of would also appear to match the current 2011 personalities of the IP vendors each represents:
About the Writer:
Since 1996, Dr. Russ Henke has been active as president of HENKE ASSOCIATES, a San Francisco Bay Area high-tech business & management consulting firm. The number of client companies served by Henke Associates during those years now numbers close to fifty and counting. Engagement lengths have varied from a few weeks up to ten years and beyond.
During his previous 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 (Research Scientist), SDRC (President & COO), Schlumberger Applicon (Executive VP), Gould Electronics (President & General Manager), ATP (Chairman and CEO), and Mentor Graphics (VP & General Manager).
Henke is a Fellow of the Society of Manufacturing Engineers (SME) and served on the SME International Board of Directors. Henke was also a board member of SDRC, PDA, ATP, and the MacNeal Schwendler Corporation, and he currently serves on the board of Stottler Henke Associates, Inc.
Henke 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). Dr. Henke is also a contributing editor of the EDACafé EDA WEEKLY, and he has published EDA WEEKLY articles every four weeks since November 2009; URL's available.
Since May 2003 HENKE ASSOCIATES has also published a total of one-hundred (100) independent COMMENTARY articles on MCAD, PLM, EDA and Electronics IP on IBSystems' MCADCafé and EDACafé.
Further information on HENKE ASSOCIATES, and URL's for past Commentaries and EDA WEEKLIES, are available at http://www.henkeassociates.net.
March 31, 2012 will mark the 16h Anniversary of the founding of HENKE ASSOCIATES.