The EDA & Electronics IP Almanac: Q3 2010
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|by Russ Henke – Contributing Editor
Every four-week period the EDA Weekly delivers to its readers information concerning the latest developments in the EDA industry, vendors, products, and finances. Frequently, feature articles on selected public or private EDA companies are presented. Brought to you by EDACafe.com. If we miss a story or subject that you feel deserves to be included, or you just want to suggest a future topic, please contact us! Questions? Feedback? Click here. Thank-you!
|For the convenience of our readers, the following single article is a combination of the two separate parts A & B of the January 2011 EDA WEEKLY. Schedule A first appeared on January 10, 2011 and Schedule B on January 17, 2011.|
Once both parts (Schedules A & B) of the inaugural 2011 issue of the EDA WEEKLY were posted, we had fulfilled our promise to continue the unbroken record of faithfully covering the EDA and the Electronics IP market segments for every quarter since the 2003 advent of the respective Quarterly Commentaries.
With the publication of nominal Q3 2010 results in Schedules A and B, content-continuity with previously-posted EDA and IP financial performance data had been fully preserved, as follows:
(a) The last stand-alone Electronics IP Industry Commentary for August 2010 covered the G5 IP vendor revenue & earnings results, etc., for Q2 2010.
(b) The last stand-alone EDA Industry Commentary for July 2010 covered the G5 EDA vendor revenue & earnings for nominal Q1 2010.
(c) Subsequently, the G5 EDA vendor revenue & earnings for nominal Q2 2010 were contained in the EDA WEEKLY issue of September 13, 2010, entitled, "Whither EDA?"
All previous EDA & IP Commentaries and EDA WEEKLIES, including those referred to above, are available to readers in the online archives of EDACafe.com.
Each quarter hereafter, the G5 EDA and G5 Electronics IP vendor results will appear in the EDA WEEKLY collection.
|By the way, the writer's Quarterly MCAD/MCAE Commentaries are unaffected by this change and will continue to emerge every three months on IBSystems' MCADCafe.com. The latest one for 2010 appeared on November 28, 2010 and covered the nominal Q3 2010 results of the remaining Group-of-Five (G5) MCAD vendors:
|The subsequent Quarterly MCAE/MCAD Commentary appears in February 2011 in MCADCafe.com to cover the nominal Q4 2010 results of the G5 MCAD vendors. Go to
We now Continue with the Combined Article
First of all, Happy New Year to everyone!
Despite the tragedies of 2010 (Haitian Earthquake, Deepwater Horizon explosion & BP Gulf Oil Spill, ongoing high unemployment, weakening of U.S. national Democratic influence on November 2, and other disturbing events too numerous to mention), around these parts we enter the new year buoyed by “Obama's Comeback” in the last month of 2010: Unemployment compensation! Gay rights! Food safety! Judicial appointments! Arms control! Health care for 9/11 responders!), and of equal importance to our local long-term euphoria: the SAN FRANCISCO GIANTS !!
Back to late 2010 we go
For measuring the financial performances of the key vendors in the world of Electronic Design Automation (EDA) and Electronics Intellectual Property (IP), we must return to late 2010, as the nominal Q3 2010 results for each of the 10 selected vendors emerged between October 21, 2010 (Rambus) and December 2, 2010 (Magma).
In each of the quarterly EDA Industry Commentaries published in EDAcafe.com since May 2003 by Henke Associates, 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.
As part of continuing EDA industry consolidation, two previously-selected EDA vendors, namely 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.
Here are featured the nominal Q3 2010 performances of the remaining members of the group of five (G5) EDA vendors:
Also, in each of the previous quarterly issues of the Electronics IP Industry Commentaries, Henke Associates examined the then-recent financial histories and future outlooks of the remarkable phenomenon of Electronics Intellectual Property (IP) providers, a niche that had emerged in its own right by 2003 to claim a substantial amount of revenue in the world of Electronics Design Automation.
Henke Associates had arbitrarily selected eight (8) publicly-traded companies originally (called the "Group-of-8" or "G8"), as representative of the then-current financial state of the Electronics IP industry. 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.
Here the remaining "G5" public Electronics IP vendors for the third quarter of 2010 will be considered:
The EDA G5 Results for Nominal Q3 2010 We begin our review of the nominal Q3 2010 EDA G5 performances by looking at the summary revenue list (Table 1) below.
The total Q3 2010 revenue for the G5 of $895 million grabs immediate attention. It's higher than the total for any other quarter in the Table, and it not only beats the revenue total of the just prior quarter by 12%, but also eclipses last year's corresponding quarter by over 14%!
This total G5 performance was achieved by huge revenue totals delivered in Q3 2010 by the Big 3. In the case of Synopsys, the Q3 2010 revenue of $375.5 million was “needed” just to allow its current fiscal year to match the total of its revenue in the just prior fiscal year. Indeed, Synopsys revenue would have dropped year over year were it not for the Company's recent activism in acquisitions.
When it comes to earnings in Table 2 below, however, the fun truly begins. We immediately observe the huge G4 total in the Q3 2010 profit column of nearly $165 million in earnings, $95 million more than Q2 2010's sum and a phenomenal $182 million better than the G4 created for Q3 2009.
We quickly spot the anomaly; Cadence's Q3 2010 profit seems unusually large at $126.75 million, and you'd be right. As is revealed in the in the vendor by vendor details below, Cadence reported a giant $143 million tax benefit in Q3 2010. It booked a similar but more modest boost of $67 million in tax benefit in Q2 2010, as did Synopsys (+$92 million) in Q4 2009. The one-off boosts almost obscure the actual nominal Q3 2010 fall off in Synopsys earnings.
Indeed, without the $302 million of G4 tax benefits over the last year, the trailing four quarters' G4 profitability would fall to only $109 million, or a G4 return on sales (ROS) of only 3.3% for that year-long period.
Once again, one might observe that the G4 may still be operating too close to breakeven to generate much market enthusiasm. Nevertheless, a glance at the Q4 2010 portion of the stock market charts for the G4 contained in the sequel, might suggest plenty of “market enthusiasm.” Nevertheless, it's still difficult for this observer to predict that steady long-term prosperity for EDA will soon arrive. So the answer to the same question raised in the September 13, 2010 edition of the EDA WEEKLY, “Whither EDA?,” is still blowin' in the wind.
Additionally, such a loophole as one-off “tax benefits” able to cause earnings distortions of this magnitude resurrects the long standing debate about whether (even GAAP) 'net income' is a preferred way to measure company performance. This topic is further discussed herein, in both the Cadence and the Synopsys “details sections” in the sequel.
G5 EDA Vendor Details for Nominal Q3 2010
On October 19, 2010 Altium LTD (ALU:ASX) reported certain financial results for the three month period ending September 30, 2010 (nominal Q3 2010). According to the October 2010 report, total Altium revenues expressed in $US were ~$9.5 million, a decline of ~17% from the revenue achieved last year in nominal Q3 2009. Using these whole numbers, the revenue in Q3 2009 would have been $9.5 million/0.83 = $11.44 million, whereas our records show $11.2 million as the actual Q3 2009 revenue. For now, we will attribute this discrepancy to the use of rounded management numbers and/or possible currency exchange differences. (To complete Table 1 above, we will use $9.5 million for Q3 2010 and $11.2 million for Q3 2009, until more accurate numbers are forthcoming).
In any case, total revenue is down in Q3 2010 year-over-year. Europe showed a gain of 10% measured in Euros, but the US declined 3%, China declined 30%, APAC outside China declined 18%, and worldwide consulting declined 23%. The US had a large increase in deferred revenue (reason was not reported).
The company's cash balance was said to have increased to US$ 5 million by the end of Q3 2010.
No earnings data were reported.
In commenting on Q3 2010, CEO Nick Martin said, “A favorable Altium performance in Europe was countered by weaker demand in other regions. Our cash position continues to grow stronger due to our careful cost management, despite a stronger Australian dollar and continued uncertainty in global economic conditions.”
Writer's Note: Altium's reports for the spring and fall quarters are brief and unaudited. The better reports covering six months each are issued in summer and winter, at which time any interim discrepancies in numbers are rectified.
Altium self description
Altium Limited (ASX:ALU) creates electronics design software based on the belief that anyone who wants to create electronic products that make a difference should be able to do so. Altium's unified electronics design environment links all aspects of electronics product design in a single application that is priced to be as affordable as possible. This helps electronics designers break down barriers to innovation, harness the latest devices and technologies, manage their projects across broad design 'ecosystems', and create connected, intelligent designs. Founded in 1985, Altium has headquarters in Sydney, and operates worldwide. For more information, visit www.altium.com.
Altium, Altium Designer and LiveDesign, and their respective logos, are trademarks or registered trademarks of Altium Limited, or its subsidiaries. All other registered or unregistered trademarks mentioned in this release are the property of their respective owners, and no trademark rights to the same are claimed.
Chart courtesy of Business Week/Bloomberg (Vertical axis is Australian $)
Altium News Item
On November 4, 2010 the Board of electronics design software company Altium (ASX:ALU) was pleased to announce the completion on November 2, 2010 of its acquisition of Australian cloud application development company Morfik Technology. Altium acquired Morfik in a scrip transaction with Altium issuing 13.3 million fully paid ordinary shares (representing approximately 14.9% of outstanding shares) for 100% of Morfik's outstanding shares.
All members of Morfik's team will join Altium and Altium will acquire all of Morfik's IP and other assets, which are located in Sydney, Hobart, and Kiev, Ukraine. Morfik's CEO, Aram Mirkazemi, will join Altium's executive team as Chief of Engineering. He will work with Altium's founder and CEO/CTO Nick Martin on defining R&D strategy and directing product development.
As announced to the market on September 16, 2010, the acquisition will bolster Altium's engineering team and technological capabilities in the web application domain, and accelerate the development of this platform for Altium's customers. When developed, this will also let electronics designers develop their own ecosystems of intelligent, connected devices, running their own cloud-based applications. These 'device ecosystems' will provide the next generation of experiences for their customers.
More immediately, when combined with the forthcoming Release 10 of Altium Designer, this will provide a framework for the creation of a web-based content delivery model that will in turn allow for a significant improvement in the value added by Altium's subscription services.
Altium will continue Morfik's existing business model, which sells software tools and subscriptions for building web-based applications. Altium believes this is fundamental to the development of the distributed applications that provide the intelligence in future device ecosystems. Historically, Morfik has focused on building cloud applications that serve conventional personal computers (desktop and mobile). This focus will now expand to include the more application-specific devices created by electronics designers that will be part of the next generation of the Internet.
On October 27, 2010 Cadence Design Systems (NASDAQ:CNDS) reported its nominal third quarter 2010 revenue of $237.93 million, up 10.10% compared to revenue of $216.12 million reported for the same period in 2009, and up 4.79% compared to $227.06 million reported in the just prior nominal Q2 2010. Actual Q3 2010 revenue of $237.93 million was above the top of the $225 to $235 million revenue guidance range provided by Cadence 3 months ago
On a GAAP basis, Cadence recognized an amazing net income of $126.75 million, or $0.48 per share on a diluted basis in the nominal third quarter of 2010. Saywhat? Reading just a little further in the Q3 report we find that this auspicious result was solely due to the fact that Cadence's third quarter 2010 net income included a whopping $143.22 million income tax benefit related to the settlement of an Internal Revenue Service examination of Cadence's federal income tax returns for the tax years 2000 through 2002. Without this tax windfall, Cadence would have had to report a Q3 2010 GAAP loss of $16.46 million. The latter is more comparable to the GAAP loss of $14.05 million back in Q3 2009.
Needless to say, that EPS of $0.48 for Q3 2010 was above the EPS guidance 3 months ago of $(0.10) to $(0.08).
The Murky World...
Alas, with the above paragraphs, we enter once more into the murky world where we'd prefer not to go - the world of eternal financial debate over which performance numbers (if any) actually provide a “real” snapshot of the relative performance of business enterprises. Most observers choose GAAP earnings over non-GAAP earnings as a reasonable choice, as there is theoretically more consistency as to what is included. But as we have already seen, even GAAP earnings can contain huge variables like income tax benefits (or penalties) that distort the current GAAP earnings figures, but drop in from a distant past at arbitrary moments.
Once one crosses the border of this murky world of financial debate, there's usually no hope of return to sanity. One is doomed to a never-ending trip into a search that is equivalent to searching for the fountain of youth. It does not exist! Oh sure, you can look at earnings before interest and taxes (EBIT); sometime that helps, but not always. To its credit, Cadence publishes its financials with lots of details for the past five quarters in its quarterly reports, as do others. The numbers are usually found deep into its supplementary report.
When we dare to enter, we see, indeed, over the last five quarters, Cadence has been operating at a “loss from operations,” with the only exception being Q2 2010. However, when the quarterly “interest” and “other expense” figures are tacked on to each of those five operations numbers, all five become “losses”. Then the next line either adds or subtracts the income tax provision, magically transforming three of those five quarters from negative to positive net income numbers.
What's a person to do? One answer is to keep looking for the magic single number which “tells all,” such as comparing the “free cash flow” generated by one company vs. another.
This writer has found over the years, that it's best to hire a really smart, experienced CFO and ask him or her to explain it all to you.
Meanwhile, in these pages, we'll keep using GAAP net earnings, and warn the reader (when possible) of anomalies like tax benefits from the past, etc. Returning now to Cadence's Q3 2010 report…
"Cadence had a successful third quarter. Momentum for Cadence solutions is building at our key customers, driven by the combination of leading and competitive technology and solid performance from the Cadence team. Revenue and operating margin continue to grow. There is still more work to do, but I am pleased with our results to date," said Lip-Bu Tan, president and chief executive officer.
Oops…here we go again; right out of the Cadence Q3 report: “In addition to using GAAP results to evaluate Cadence's business, management believes it is useful to measure results using a non-GAAP measure of net income or net loss, which excludes, as applicable, amortization of intangible assets, stock-based compensation expense, integration and acquisition-related costs, acquisition-related income tax benefits, shareholder litigation costs, gains or losses and expenses or credits related to non-qualified deferred compensation plan assets, executive severance costs, restructuring charges and credits, amortization of discount on convertible notes, losses on extinguishment of debt, equity in losses or income from investments, write-down of investments, and gains or losses on the sale of investments. Non-GAAP net income or net loss is adjusted by the amount of additional taxes or tax benefit that the company would accrue if it used non-GAAP results instead of GAAP results to calculate the company's tax liability.” Got that?
The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially:
For the fourth quarter of 2010, the company expects total revenue in the range of $230 million to $240 million. Fourth quarter GAAP net loss per diluted share is expected to be in the range of $(0.06) to $(0.04).
For the full year 2010, the company expects total revenue in the range of $917 million to $927 million. On a GAAP basis, net income per diluted share for fiscal 2010 is expected to be in the range of $0.55 to $0.57.
Cadence self description
Cadence enables global electronic-design innovation and plays an essential role in the creation of today's integrated circuits and electronics. Customers use Cadence® software and hardware, methodologies, and services to design and verify advanced semiconductors, consumer electronics, networking and telecommunications equipment, and computer systems. Cadence is headquartered in San Jose, Calif., with sales offices, design centers, and research facilities around the world to serve the global electronics industry. More information about Cadence and its products and services is available at www.cadence.com.
Chart courtesy of Yahoo Finance
Cadence News Item
On December 15, 2010 Cadence Design Systems, Inc. (NASDAQ:CDNS) announced that it had won Electronic Design Magazine's Best Electronic Design award for 2010 for the Cadence® Encounter® Digital Implementation (EDI) System 9.1 in the EDA - Design, Verification and Implementation Environment category. This product is highlighted in Electronic Design's December 9, 2010 issue.
"I'm pleased to recognize Cadence's Encounter Digital Implementation (EDI) System 9.1 as one of the best EDA technology offerings in 2010," said David Maliniak, EDA technology editor, Electronic Design. "The tools represent a realization of Cadence's EDA360 vision and the kind of holistic approach to physical design and verification that is demanded at 28 nanometers and below."
Cadence Encounter EDI System is a complete and integrated digital design, implementation, and verification environment for the development of large-scale, complex SoCs, and delivers pervasive design intent, abstraction, and convergence across the flow for a more deterministic path to silicon success. The new and expanded suite of capabilities in EDI System answers the industry call for improved designer productivity in developing advanced low-power and mixed-signal SoCs at leading-edge process nodes -- such as 32 and 28 nanometers -- with hundreds of millions of gates, including hundreds of IP elements and embedded processors.
"The award is an industry benchmark that showcases the best of the year," said David Desharnais, group director, product management at Cadence. "We're excited to receive this award; it is a testament of our commitment to tackling the challenges of end-to-end chip design and improving the time and economics involved with bringing SoCs to market. Electronic Design is a leading industry publication with a consistent pulse on not only the EDA industry, but the entire electronic design community. To be acknowledged by these industry leaders is strong confirmation that we are delivering on our promise and vision of EDA360."
On December 2, 2010 Magma® Design Automation Inc. (NASDAQ:LAVA) reported revenue of $33.93 million for its fiscal 2011 second quarter ended October 31, 2010 (a.k.a. our nominal Q3 2010), up 14.38% from the $29.66 million reported in the nominal Q3 2009 year-ago quarter. Sequentially, nominal Q3 revenue was up a narrow 4.2% compared to $32.56 million in nominal Q2 2010. Magma guidance 3 months ago was for revenue in nominal Q3 to come in between $33.0 and $33.50 million.
"We had another strong performance in the second (fiscal) quarter as, for the seventh consecutive quarter, we exceeded all guidance targets and generated cash," said Rajeev Madhavan, Magma chairman and chief executive officer. "Not only did our analog products continue to take market share, but we added five new customer logos in our core digital implementation segment - momentum that I expect will continue as we deploy Talus 1.2 and Talus Vortex FX, new products we announced today."
Other highlights of Magma's nominal Q3 2010 included an increased presence in the place and route segment to 18 of the world's Top 20 semiconductor companies; the addition of 5 new customers of the FineSim circuit simulation products; and adding three new customers each for the SiliconSmart library characterization product and the products.
In accordance with generally accepted accounting principles (GAAP), Magma reported a net loss of $2.714 million, or $(0.04) per share (basic and diluted), for the quarter, compared to net income of $4.344 million, or $0.09 per share (basic) and $0.08 per share (diluted), for the year-ago quarter, a negative earnings swing year-over-year of $7.058 million, or minus 12 cents a share (diluted). Still, the net loss in nominal Q3 2010 was an improvement of $0.55 million compared the net loss recorded in the just prior quarter. Magma guidance 3 months ago was for nominal Q3 2010 EPS to be $(0.07) to $(0.08).
Finally, on a positive note, in nominal Q3 2010 Magma generated cash flow from operations of approximately $2.7 million.
For Magma's nominal Q4 2010 ending January 30, 2011, the company expects total revenue in the range of $34.0 million to $34.5 million. GAAP net loss per share is expected to be in the range of $(0.04) to $(0.03).
Magma self description
Magma's electronic design automation (EDA) software provides the "Fastest Path to Silicon"(TM) and enables the world's top chip companies to create high-performance integrated circuits (ICs) for cellular telephones, electronic games, WiFi, MP3 players, digital video, networking and other electronic applications. Magma products are used in IC implementation, analog/mixed-signal design, analysis, physical verification, circuit simulation and characterization. The company maintains headquarters in San Jose, Calif., and offices throughout North America, Europe, Japan, Asia and India. Magma's stock trades on NASDAQ under the ticker symbol LAVA. Visit Magma Design Automation on the Web at www.magma-da.com.
Magma is a registered trademark and "Fastest Path to Silicon" is a trademark of Magma Design Automation. All other product and company names are trademarks and registered trademarks of their respective companies.
Chart courtesy of Yahoo Finance
Magma News Item
On December 22, 2010 Magma® Design Automation (NASDAQ:LAVA) announced that Electronic Design Magazine named the Magma Tekton(TM) static timing analysis platform to its list of Hot 100 Products for 2010. Tekton is one of just three products named in the Electronic Design Automation (EDA) category.
Introduced in March of this year, Tekton is uniquely suited for today's most challenging designs and offers higher capacity and faster runtimes than traditional tools, without sacrificing accuracy. It runs multi-scenario analysis efficiently on low-cost hardware without requiring a large number of expensive servers and software licenses. Tekton leverages breakthrough technology to address complex sign-off challenges.
"It gives us great pleasure to have Electronic Design recognize Tekton as a hot product for this year," said Premal Buch, general manager of Magma's Design Implementation Business Unit. "Design teams have responded positively as well and have consistently told us that Tekton runs significantly faster as a timing analyzer on a single CPU and dramatically faster in a multimode, multicorner analysis on a multicore machine."
On November 19, 2010 Mentor Graphics Corporation (NASDAQ: MENT) announced results for its fiscal third quarter ending October 31, 2010. For purposes of consistency, this is nominal Q3 2010 in EDA WEEKLY parlance.
For nominal Q3 2010, the company reported Revenues of $238.937 million, up 26.3 % year-over-year compared to nominal Q3 revenue in 2009 of $189.196 million, and up 27.2% over sequential Q2 2010 revenue. For the last nine months, however, revenues were up only 7.4% to $607.448 million, vs. $565.592 million for the same 9 months last year. (By the way, the company's Q3 2010 revenue guidance 3 months ago was for $220 million).
Net Income for nominal Q3 2010 jumped into the black at $15.256 million compared to a net loss of $27.034 million for nominal Q3 2009, and a net loss of $14.2 million in sequential Q2 2010. Despite the black ink of Q3 2010, for nine months YTD the company remains in red ink to the tune of some $22 million, although it was deeper in $61 million of red ink after nine months last year.
GAAP earnings per share in nominal Q3 2010 were $0.14, vs. a loss of $0.28 per share in Q3 2009, and a loss of $0.13 per share in sequential Q2 2010. (The company's earnings per share guidance for Q3 2010 three months ago was for $0.08 a share).
“The strength of our (2010) third quarter was broad-based with bookings up 60% over the year ago quarter,” said Dr. Walden C. Rhines, CEO and chairman of Mentor Graphics. “Our strategy of focusing on areas of differentiation rewarded us this quarter with strong growth in emulation, printed circuit board design software, design for test, physical verification and a number of our newer system-oriented products like automotive networking. Our diversification also helped drive the business with over 30% of new customers coming from non-traditional segments. We remain confident that our strategy will continue to drive earnings growth for the company.”
During the quarter, the company launched new analysis capability in the FloTHERM® thermal analysis tool, which allows designers to easily find and correct bottlenecks in heat flow in a design. (This capability was featured in the December 13, 2010 EDA WEEKLY ONE YEAR LATER column).
The company's embedded software division released Mentor Embedded ReadyStart™ Platform, a new easy-to-use platform for rapid development of embedded systems, and a version of the Inflexion Platform™ graphical user interface for the Android™ platform. Additionally, the embedded market analyst firm VisionMobile reported that Mentor's Nucleus® real-time operating system is the market leader in handsets with over 2.3 billion copies shipped.
“The third quarter was a record on revenue, bookings and product book-to-bill,” said Gregory K. Hinckley, president of Mentor Graphics. “Despite some headwinds from currency and product mix, we are confident that this momentum will continue into the fourth quarter. As a result, we are raising guidance.”
For the fiscal fourth quarter, the company expects revenue of about $293 million, and GAAP earnings per share of about $0.40. For the full fiscal year 2011 ending January 31, 2011 the company sees revenue in the range of $900 million, and GAAP earnings per share of approximately $0.19.
Mentor Graphics self description
Mentor Graphics Corporation (NASDAQ: MENT) is a world leader in electronic hardware and software design solutions, providing products, consulting services and award-winning support for the world's most successful electronics, semiconductor and systems companies. Established in 1981, the company reported revenues over the last 12 months of about $850 million. Corporate headquarters are located at 8005 S.W. Boeckman Road, Wilsonville, Oregon 97070-7777. World Wide Web site: http://www.mentor.com/.
Chart courtesy of Yahoo Finance
Mentor Graphics News Item
On December 23, 2010 Mentor Graphics Corporation (NASDAQ:MENT) announced that the Calibre® InRoute ™, Catapult® C , and FloTHERM ® products were selected for EDN magazine's Hot 100 for 2010. The Hot 100 is EDN's list of "the products and technologies that in 2010 heated up the electronics world and grabbed the attention of our editors and our readers."
Olympus-SoC and Calibre Speed IC Physical Design Closure
The Calibre InRoute platform allows designers to natively invoke Calibre tools within the Olympus-SoC™ place and route system to achieve true manufacturing closure during physical design. The Calibre InRoute product automatically detects and fixes design rule checking (DRC) violations and performs design for manufacturing (DFM) enhancements while optimizing for area, timing, power and signal integrity. The full power of the Olympus-SoC and Calibre platforms together improve design quality, eliminate late-stage surprises, and significantly reduce time to closure.
FloTHERM 9 Addresses Thermal Bottlenecks
Version nine of the FloTHERM 3D CFD (computational fluid dynamics) software for electronics cooling applications includes patent-pending technology, including a bottleneck field that shows areas in a design where a heat path is being congested as it attempts to flow from high junction temperature points to ambient. Design changes to these bottlenecks can help solve the heat flow problem. The Shortcut field highlights areas where the addition of a simple element to the design will provide a new effective heat flow path to ambient temperature. As a result, instead of experimenting with trial and error solutions, engineers can achieve a better solution significantly faster.
This capability was highlighted in the December 13, 2010 EDA WEEKLY feature ONE YEAR LATER.
Mentor Adds SystemC Support to Catapult C
The Catapult C Synthesis tool added SystemC synthesis, expanding the Catapult C tool's full-chip synthesis capabilities. This complements the Catapult C tool's existing untimed ANSI C++ support for algorithmic, control logic, and low-power synthesis capabilities by expanding its full-chip synthesis application scope through the addition of SystemC synthesis for efficient handling of specific SoC needs such as complex bus interfaces, SoC interconnect and TLM2.0-based ESL flows.
EDN.com is a comprehensive information source for the EOEM (electronics original equipment manufacturer) segment, providing in-depth technical information for electronics design engineers and news and strategic business insight for executives.
On December 1, 2010 Synopsys, Inc. (NASDAQ: SNPS) reported results for its fourth FISCAL quarter and fiscal year 2010, both ending Saturday October 30, 2010. Synopsys' fourth fiscal quarter is our nominal Q3 2010.
Speaking shortly after the December 1, 2010 earnings release, Synopsys Senior Account Director Diane Hayward summarized the results as follows: “In short, Synopsys reported a strong end to its fiscal year and is entering fiscal 2011 with an excellent outlook. The company has good technical and customer momentum, and despite the recession, has increased market share, achieved revenue growth, continued with strong R&D investments and delivered new products. It will continue its efforts to explore M&A that broadens its total addressable market and move forward with a financial objective to achieve high-single digit EPS growth.“
For nominal Q3 2010, Synopsys reported revenue of $375.5 million, of $18.5 million above its top-of-the-range guidance number of $357 million, and up 11% compared to $338.3 million year-over-year for nominal Q3 2009. Sequentially, Q3 2010 revenue was 11.4% over nominal Q2 2010 revenue of $336.9 million.
However, revenue for fiscal year 2010 was just $1.380661 billion, an increase of only $20.616 million or 1.5% from $1.360045 billion in fiscal 2009.
“Synopsys had a strong fiscal year, relative to the industry and our expectations, and we enter fiscal 2011 with an even better outlook,” asserted Aart de Geus, chairman and CEO of Synopsys. “Building on significant technology and customer momentum, and an improved customer landscape, we expect to deliver growth in both traditional EDA and the adjacencies in which we've been steadily investing over the past several years.”
Synopsys' revenue guidance for nominal Q3 2010 provided 3 months earlier predicted Q3 revenue of $349 million to $357 million. However, that guidance was conditioned on including “no future acquisition-related expenses that may be incurred. The guidance targets constituted forward-looking information and were based on then-current expectations.”
On a generally accepted accounting principles (GAAP) basis, net income for nominal Q3 2010 dipped to $25.4 million, or $0.17 per share, but it was enough to exceed the $19.5 million, or $0.13 per share, for nominal Q3 2009. Sequentially, however, nominal Q3 2010 earnings of $25.4 million were well below nominal Q2 2010's earnings of $39.33 million and were also below nominal Q1's earnings of $39.55 million.
Synopsys' EPS guidance for nominal Q3 2010 provided 3 months earlier had predicted that nominal Q3 would yield $0.21 - $0.27 net income per share (subject to the same 'condition' as stated above). So the actual $0.17 EPS delivered for nominal Q3 2010 was some four cents below the bottom of the range guidance.
GAAP net income for fiscal year 2010 was significantly improved at $237.1 million, or $1.56 per share, compared to $167.7 million, or $1.15 per share for fiscal 2009. Lest we forget, however, net income for fiscal year 2010 includes a one-time $94.3 million, or $0.62 per share, tax benefit associated with the IRS settlement for fiscal years 2002-2004, announced on January 12, 2010. Without this one-time tax benefit, Synopsys' net income for fiscal 2010 may well have been $142.8 million, or only 85.2% of the fiscal 2009 net income.
SNPS (Synopsys stock) suffered a price decrease of 2.5% on December 2, 2010, the day after the nominal Q3 2010 results were announced. But the stock quickly recovered within 6 days and went on to achieve a closing price of $27.23 by December 23, 2010, the highest level the stock has been since closing at $26.35 way back on May 27, 2008. (However, the stock today is nowhere close to its most recent high of $35.29 reached on January 2, 2004, nor its all time high of $36.19 achieved on November 1, 1999.
Chart courtesy of Yahoo Finance
Certainly the cost to Synopsys of acquisitions during fiscal 2010 could easily lower fiscal 2010 earnings vs. those of fiscal 2009, but the revenue added by those acquisitions would surely have delivered an incremental benefit to the Synopsys revenue line for fiscal 2010.
Consider just the effect of one acquisition on revenue, for example. Virage Logic recognized revenue of $25.24 million in Q1 2010, the last quarter for which it published its stand-alone revenue prior to its acquisition by Synopsys consummated on September 2, 2010. Even assuming no improvement in revenue enjoyed by the integrated Virage Logic team, without the added Virage Logic revenue for the September and October 2010, Synopsys' total revenue for the fiscal year 2010 may have shown no growth or even a revenue decrease compared to fiscal 2009.
Synopsys did a decent job in cash flow management in fiscal 2010. Despite using some $500,829,000 net cash in connection with acquisitions during the year, Synopsys still managed to improve its fiscal year end cash hoard to $775,497,000 or $73,794,000 more cash that it had when it began the year.
Speaking of Cash Flow...
This is likely as good a place as any, to return to the earlier discussion about whether 'net income' is the best measure of a company's performance, first mentioned above in the text between Tables 1 and 2, and mentioned again in the section on Cadence (see The Murky World... above). As press time approached for the JANUARY 10th posting of the EDA WEEKLY, the writer came across an article by Seth Jayson in the Motley Fool published on December 23, 2010. Here's how his article began:
“Although business headlines still tout earnings numbers, many investors have moved past net earnings as a measurement of a company's economic output. That's because earnings are very often less trustworthy than cash flow, since earnings are more open to manipulation based on dubious judgment calls. Earnings' unreliability is one of the reasons investors often flip straight past the income statement to check the cash-flow statement. In general, by taking a close look at the cash moving in and out of the business, you can better understand whether the last batch of earnings brought money into the company or merely disguised a cash gusher with a pretty headline.”
Moreover, the examples of using 'free cash flow' instead of net income that Mr. Jayson chose? Four of our G5 EDA vendors! This chart from his article is relevant:
“Over the past 12 months, Synopsys generated $301.8 million cash on net income of $237.1 million. That means it turned 21.9% of its revenue into FCF. That sounds pretty impressive. Still, it always pays to compare that figure with those of sector and industry peers and competitors, to see how your company stacks up.
But just when one is getting enthusiastic about 'free cash flow' as a measure, the author warns:
“Unfortunately, the cash-flow statement isn't immune from nonsense, either. That's why it pays to take a close look at the components of cash flow from operations, to make sure that the cash comes from high-quality sources. They need to be real and replicable in the upcoming quarters, rather than offset by continual cash outflows that don't appear on the income statement, such as major capital expenditures. For instance, cash flow based on cash net income and adjustments for non-cash income-statement expenses, like depreciation, is generally favorable. An increase in cash flow based on stiffing your suppliers (by increasing accounts payable) or shortchanging Uncle Sam on taxes will come back to bite investors later. The same goes for decreasing accounts receivable; it's good to see, but it's ordinary in recessionary times, and you can increase collections only so much”.
Gee, it appears that the question is still open. Nevertheless, the relative ranking of the four vendors above is similar, whether “net income' or 'free cash flow' is the criterion.
The Vendor Supplemental Reports on Revenue Distribution
In the EDA WEEKLY of September 13, 2010, entitled “Whither EDA?,” the writer discussed in Footnote  the appearance of supplementary reports from several G5 vendors on revenue distribution:
The writer argued that the Synopsys list provided some useful data, reproduced here in green font:
Comment #2: Among the four segments into which Synopsys has chosen to split its total revenue for supplementary reporting purposes, the revenue from the "IP & Systems" segment has reached and eclipsed the "Manufacturing" segment in total revenue for the first three quarters of FY 2010, to become the second highest revenue producer next to the traditional leader -- the Synopsys "Core EDA" segment:
Comment #3: Revenue recognition in FY 2010 Q4 from recent IP acquisitions, such as Virage Logic, is likely to increase the full 2010 fiscal year revenue number percentage for "IP & Systems" faster than it increases total Synopsys revenue, which may mean an even higher YE percentage of "IP & Systems" revenue as a percent of total Synopsys revenue than 13.30% for the full FY 2010.
Indeed, the September 13th prediction in Comment #3 by the writer came to pass in the final quarter of Synopsys fiscal year (a.k.a. nominal Q3 2010), when the 'IP & Systems' category vaulted to 17.66% of revenue in the quarter, lifting the category to 14.48% for the fiscal year, as Synopsys' data shows:
Synopsys' Nominal Q4 2010 & Fiscal 2011 Financial Targets
Synopsys also provided its financial targets for nominal Q4 2010 and for its next full fiscal year (2011). These targets do not include future acquisition-related expenses that may be incurred in fiscal 2011. These targets constitute forward-looking information and are based on current expectations.
Nominal Q4 2010 Targets:
• Revenue: $360 million - $368 million
• GAAP expenses: $305 million - $323 million
• Other income and expense: $0 - $2 million
• Fully diluted outstanding shares: 149 million - 154 million
• GAAP earnings per share: $0.21 - $0.28
• Revenue from backlog: greater than 90%
Full Fiscal Year 2011 (November 2010 through October 2011) Targets:
• Revenue: $1.500 billion to $1.525 billion
• Other income and expense: $2 to $6 million
• Fully diluted outstanding shares: 149 million to 154 million
• GAAP earnings per share: $1.06 to $1.24
• Cash flow from operations: approximately $220 to $240 million
• Revenue from backlog: greater than 80%
Synopsys, Inc. (NASDAQ:SNPS) is a world leader in electronic design automation (EDA), supplying the global electronics market with the software, intellectual property (IP) and services used in semiconductor design, verification and manufacturing. Synopsys' comprehensive, integrated portfolio of implementation, verification, IP, manufacturing and field-programmable gate array (FPGA) solutions helps address the key challenges designers and manufacturers face today, such as power and yield management, system-to-silicon verification and time-to-results. These technology-leading solutions help give Synopsys customers a competitive edge in bringing the best products to market quickly while reducing costs and schedule risk. Synopsys is headquartered in Mountain View, California, and has approximately 70 offices located throughout North America, Europe, Japan, Asia and India. Visit Synopsys online at http://www.synopsys.com.
Chart courtesy of Yahoo Finance
Other Tables of Interest
Starting with his initial EDA WEEKLY posting on November 09, 2009, the first year's series of EDA WEEKLY articles by this writer continued on December 07, 2009, with the publication entitled, “MAD Progress.”
The “MAD Progress” article was the subject of a ONE YEAR LATER update by Mentor Graphics Corporation last month, in the December 13, 2010 EDA WEEKLY posting.
In the current January 10, 2011 EDA WEEKLY, we welcome a ONE YEAR LATER contribution from Synopsys, Inc., the new owners of Virage Logic. The former IP vendor was profiled in “Virage Logic - On the Move,” first posted on December 22, 2009. It was the third of thirteen debut-year EDA WEEKLY articles by the writer through October 2010, the thirteen issues a result of the schedule of publishing every four weeks:
Virage Logic Finds a New Home within Synopsys
It seems like only yesterday that Dr. Russ Henke profiled Virage Logic in his EDA WEEKLY article that first appeared on December 22, 2009. The Electronics Intellectual Property (IP) landscape has changed quite a bit since then, as EDA players emphasize how tools, services and IP are each integral to helping electronics designers lower their costs and integration risks while speeding time-to-market.
One dramatic example of this change in the IP landscape was Synopsys' acquisition of Virage Logic. Virage Logic's embedded SRAMs, non-volatile memory, logic libraries, configurable processor cores, embedded test and repair IP and audio post-processing software were natural complements to Synopsys' DesignWare® interface and analog IP portfolio. The Virage Logic acquisition emphasized Synopsys' commitment to growing its IP portfolio, increasing its engineering staff and expertise, and enabling it to continue developing products to meet designers' evolving requirements.
For nearly a decade, Synopsys' DesignWare IP business has grown both organically and through acquisitions, the latter including Cascade (PCI Express® IP); Mosaid (DDR IP); MIPS' Analog Business Group, formerly Chipidea (data converters, audio codecs and video front-ends); and Virage Logic. With its latest acquisition, Synopsys became the second largest IP vendor (Gartner, March 2010) with over 1300 engineers worldwide, 800 of which are analog/mixed-signal engineers.
Figure 1 below shows a Synopsys timeline of key acquisitions and product introductions in the last five years:
Figure 1: Synopsys Grows its IP Business
Full Steam Ahead
Two months after the acquisition closed in September 2010, the former Virage Logic team moved into Synopsys' headquarters in Mountain View, California (as well as to various other locations around the world). It is now a part of the Synopsys Solutions Group, which is headed by Mr. Joachim Kunkel, the senior vice president and general manager. Synopsys holds the same fundamental beliefs that Virage Logic had, “Whatever it takes to be a trusted IP partner.” This includes being the technology leader by having the most advanced products available, delivering high-quality products that meet customers' project schedules, and becoming an integral part of SoC design ecosystems.
With these elements as its backdrop, Synopsys has made significant progress since the Virage Logic acquisition, including announcing several new 28-nm memory compilers, and releasing the first dual core ARC processor optimized for high-definition audio players (AS 221 BD). In addition, Synopsys introduced the DesignWare Sonic Focus® Stereo and Sonic Focus Stereo HD solutions, which are audio-post processing software IP products that enable SoC designers and OEMs to significantly enhance audio quality in low-power DSP applications and tethered consumer electronic devices.
Overall, Synopsys has introduced several new DesignWare IP products, such as a comprehensive MIPI IP portfolio consisting of CSI-2, D-PHY, DigRF v3 and DigRF 4, DSI and M-PHY protocols, HDMI 1.4 TX and RX solutions, the DDR multiPHY, which supports six standards in a single PHY and its complementary Universal DDR Controllers.
Synopsys was also awarded TSMC's “Interface IP Partner of Year”, which is a testament to Synopsys' investment in customer support and delivering over 150 high-quality IP products supporting the TSMC processes (see Figure 2).
These are just a few examples of how Synopsys continues to innovate with new products and technology that help designers incorporate key functionality into their designs and deliver compelling products to the market.
Figure 2: John Koeter, vice president of marketing for the Solutions Group at Synopsys,
accepts TSMC's “Interface IP Partner of the Year” award on behalf of Synopsys,
at TSMC's OIP Partner Forum on October 5, 2010.
In addition to the acquisition of Virage Logic and the expansion of its DesignWare IP portfolio, Synopsys has invested heavily in growing its systems business with the acquisitions of VaST, CoWare, and Synfora this past year. With the combination of IP and System level solutions, Synopsys is well positioned to provide the design community with the necessary elements that help designers accelerate their hardware (HW) and software (SW) throughout the IP, semiconductor and system design chain.
Designers can find all of the following elements from a single trusted IP provider - Synopsys:
- High quality, most commonly-used semiconductor IP solutions
- Tools and models to develop and reuse differentiated functional blocks at the system level
- Tools and models to develop the best SoC architecture
- Virtual and FPGA-based prototyping solutions to accelerate software development, HW/SW integration, and system validation
Many thanks to Synopsys' Meaghan Le & Heather Webb for the above vignette to celebrate the EDA WEEKLY ONE YEAR LATER program.
Among the ten additional EDA WEEKLY postings during that first year, six featured five more EDA-related companies, two of the five subsequently-covered companies which are privately-held and three publicly-traded.
The remaining four of the ten additional freshman year postings were editorial commentaries on the economy & semiconductors, the economy and the EDA Industry, the State of IP (Intellectual Property), and “Whither EDA?”
The Sophomore Year
The second year of EDA WEEKLY articles by this writer began on November 15. 2010 with “Lynguent Part I,” followed on December 13, 2010 by “Lynguent Part II.”
To access any of the aforementioned articles, go to:
The New Year Greetings stated above
So much for the Happy New Year euphoria that characterized the opening paragraphs of this edition of the EDA WEEKLY. In an augenblick, the January 8th tragedy in Tucson Arizona reminded all of us how fragile and over-pressurized the political situation between right and left has become in the USA.
It's not surprising that New York Times columnist Paul Krugman may have published the most succinct description on January 9, 2011:
And to express the feelings of the whole country, President Barack Obama went to Arizona on January 12 to do what he does best, using his rare abilities to unite and bind up wounds, bringing right and left together in a moving speech for the Memorial Service for the Victims of the January Shooting in Tucson, Arizona. While the words are reproduced here in Footnote , readers may wish to view video replays widely available from multiple news sources.
Back to late 2010 we have been and must go again
Before we dive into the new details below about the Q3 2010 results delivered by the G5 Electronics Intellectual Property (IP) Vendors, we will first review key topics concerning both the 'Total EDA Market' and the 'Semiconductor Market.'
The “Total” EDA Market
On January 5, 2011 The EDA Consortium (EDAC) Market Statistics Service (MSS) announced its quarterly report for Q3 2010 regarding data gleaned from its membership and beyond. The EDAC MSS estimates that the “total” overall Electronic Design Automation (EDA) industry revenue for Q3 2010 was $1307.0 million, an 11.9% increase compared to a YOY “total” of $1167.9 million in Q3 2009. Sequential EDA “total” revenue for Q3 2010 increased 6.9% over Q2 2010.
(By comparison, the data from Table 1 showed $896 million in revenue for just the covered subset Group of 5 (G5) EDA vendors for nominal Q3 2010, with a YOY increase of 14% and sequential increase of 12%).
The EDAC numbers for the “total” EDA industry also showed that the four-quarters moving average, which compares the most recent four quarters through Q3 2010 to the prior four quarters, increased by only 4.9%.
"Overall third quarter 2010 results represent a significant increase compared to Q3 2009, with double digit increases in CAE, IC Physical Design & Verification, and SIP," said Dr. Walden Rhines, EDAC chair and chairman and CEO of Mentor Graphics. "Geographically, the Americas, Europe/Middle East/Africa, and Asia/Pacific regions all had double digit increases relative to Q3 2009. The Americas, Japan, and the Asia/Pacific region also increased sequentially."
Companies that were tracked by EDAC employed 26,474 professionals in Q3 2010, an increase of 1.9% compared to Q2 2010, and up 2.1% from the 25,942 employed in Q3 2009.
The complete MSS report, containing detailed revenue information broken out by both categories and geographic regions, is of course available via subscription from the EDA Consortium.
EDA “Industry Revenue” Graph, Courtesy of EDA Consortium MSS
EDAC MSS Revenue by Product Category
Computer Aided Engineering (CAE), EDA's largest category, generated revenue of $512.8 million in Q3 2010. This represents a 13.9% increase over the same period in 2009. The four-quarters moving average for CAE increased 4.5%.
IC Physical Design & Verification revenue increased to $291.6 million in Q3 2010, an 11.8% increase compared to Q3 2009. The four-quarters moving average increased 0.1%.
Printed Circuit Board and Multi-Chip Module (PCB & MCM) revenue of $125.7 million decreased 5.4% compared to Q3 2009. The four-quarters moving average for PCB & MCM decreased 1.8%.
Semiconductor Intellectual Property (SIP) revenue totaled $298.5 million in Q3 2010, a 24.0% increase compared to Q3 2009. The four-quarters moving average increased 21.1%. This is the category that would include the Electronics IP G5 subset reported on in Schedule B.
Services revenue was $78.5 million in Q3 2010, a decrease of 6.0% compared to Q3 2009. The four-quarters moving average decreased 12.8%.
Revenue by Geographic Region
The Americas, EDA's largest region, purchased $577.2 million of EDA products and services in Q3 2010, an increase of 12.9% compared to Q3 2009. The four-quarters moving average for the Americas increased 3.1%.
Revenue in Europe, the Middle East, and Africa (EMEA) was up 9.9% in Q3 2010 compared to Q3 2009 on revenues of $224.3 million. The EMEA four-quarters moving average was flat.
Third quarter 2010 revenue from Japan decreased 7.1% to $231.2 million compared to Q3 2009. The four-quarters moving average for Japan decreased 6.0%.
The Asia/Pacific (APAC) region revenue increased to $274.3 million in Q3 2010, a 34.6% increase compared to the same quarter in 2009. The four-quarters moving average increased 28.9%.
MSS Report self description
The EDA Consortium Market Statistics Service reports EDA industry revenue data quarterly and is available by annual subscription. Both public and private companies contribute data to the report. Each quarterly report is published approximately three months after quarter close. MSS report data is segmented as follows: revenue type (product licenses and maintenance, services, and SIP), application (CAE, PCB/MCM Layout, and IC Physical Design and Verification), and region (the Americas, Europe Middle East and Africa, Japan, and Asia Pacific), with many subcategories of detail provided. The report also tracks total employment of the reporting companies.
EDA Consortium self description
The EDA Consortium is the international association of companies that provide design tools and services that enable engineers to create the world's electronic products used for communications, computer, space technology, medical, automotive, industrial equipment, and consumer electronics markets among others. For more information about the EDA Consortium, visit www.edac.org, or to subscribe to the Market Statistics Service, call 408-287-3322 or email Email Contact. The information supplied by the EDA Consortium is believed to be accurate and reliable, but the EDA Consortium assumes no responsibility for any errors that may appear in this document. All trademarks and registered trademarks are the property of their respective owners.
In a separate meeting hosted by the EDAC on January 5, 2011, IBSystems' own Graham Bell sat in and filed this report in his January 6, 2011 Blog:
Whither EDA in 2011?
January 6th, 2011 by Graham Bell
Dan Nenni, blogger, hosted the EDA Consortium CEO Annual CEO Forecast and Industry Vision Panel last night at the Double Tree Hotel in San Jose. Aart de Geus from Synopsys and Charlie Huang (filling in for Lip-Bu Tan) from Cadence and Ravi Subramanian from Berkeley talked about various trends, drivers and impacts. It was Wally Rhines from Mentor that named two possible growth numbers for 2011. One was based on a calculation what the financial analysts say for the coming year and came in at 8%.
The second figure was based on a favorite formula that says the previous year's R&D spend is strongly correlated to the following year's EDA growth. This formula delivered an exuberant 14%.
I like these numbers and I think we can expect hiring to pick up. As one exec over at a leading company mentioned to me, even marketing managers are finding jobs.
What do you think? Do you see 8% or 14%, and will hiring pick-up?
One more thing….the Jan. 4 issue of EDA Weekly covered The Best of 2010 EDA Weekly Magazine, Press Postings, and Careers Corner . Check it out
SIA Reports November 2010 Chip Sales
On January 3, 2011 The Semiconductor Industry Association (SIA) reported that worldwide semiconductor sales in November (the last month for which data are available) were $26.0 billion, a decrease of 0.9% from the prior month when sales were $26.2 billion. Sales increased by 14.4% from November 2009 when sales were $22.7 billion. Year-to date sales through November were $271.8 billion, up 34.0% from the like period of 2009 when sales were $202.8 billion. All monthly sales numbers represent a three-month moving average.
"Despite continuing macroeconomic uncertainty, the worldwide semiconductor industry is slated to close the year at record sales levels with year-over-year growth rates not experienced in nearly a decade," said SIA President Brian Toohey. "The application of advanced technologies continues to further the proliferation of semiconductor content into a wider range of end products including media tablets, smart phones, e-Readers, and automobiles, resulting in impressive semiconductor sales in 2010," Toohey noted. "We expect continued moderation in sales growth, in line with our November* forecast," Toohey concluded.
*The following was the SIA November 4, 2010 forecast:
The Semiconductor Industry Association (SIA) released its annual forecast of global semiconductor sales for 2010 through 2012, projecting record sales of $300.5 billion in 2010, an increase of 32.8%. The forecast calls for sales to grow by 6.0% in 2011, to $318.7 billion, followed by an increase of 3.4% to $329.7 billion in 2012. The projected compound annual growth rate is estimated to be 13.4% for the period 2009 through 2012.
“We experienced record sales this year due to strong global demand across a broad range of end markets,” said SIA President Brian Toohey. “We expect more moderate growth through 2012 as the economy recovers and consumer confidence restores,” Toohey concluded.
About the SIA Global Sales Report
The SIA Global Sales Report (GSR) is a three-month moving average of sales activity. The GSR is tabulated by the World Semiconductor Trade Statistics (WSTS) organization, an independent, non-profit organization established by the global semiconductor industry to compile industry statistics. The moving average is a mathematical smoothing technique that mitigates variations due to differences in companies' financial calendars.
SIA self description
The SIA is the voice of the U.S. semiconductor industry, America's number-one export industry over the past five years. SIA seeks to continue U.S. leadership in this critical sector that employs 185,000 people in the U.S. and provides the enabling technology for America's $1.1 trillion high-tech industries with a U.S. workforce of nearly 6 million people. More information about the SIA can be found at www.sia-online.org. We begin our review of the Q3 2010 Electronics IP G5 performances by looking at the lP summary revenue list (Table 3) below.
It appears that the Total G5 IP Revenue for Q3 2010 was a virtual tie with sequential quarter Q2 2010, at ~$227 million. However, the total G5 IP revenue for Q3 2010 did score a formidable ~70% year over year increase compared to Q3 2009.
To achieve the tie between Q3 2010 and sequential Q2 2010, ARM improved over 5% in revenue and CEVA improved less than 1%, but MIPS decreased 3%, MoSys dropped nearly 12%, and Rambus sank over 18%.
The more delightful Q3 2010 total G5 revenue increase of 70% over last year's Q3, was fueled by double-digit percentage revenue gains by all five vendors, led by MIPS' 51% YOY gain, and by ARM's YOY 28.5% increase on seven times the sales volume.
To the extent that the G5 IP revenue numbers and the EDAC Semiconductor and IP (SIP) revenue numbers are compatible, the G5 IP vendors represented ~76% of the EDAC SIP total revenue in Q3 2010, but only ~65% of the EDAC SIP total revenue in Q3 2009. (Exploring these details further would require access to the source data for the EDAC SIP numbers). [Note: For more details on ROS %'s and Market Caps for nine of the ten vendors covered herein, please see Table 5 in the sequel (far below)].
Table 3: G5 Public Electronics IP Companies’ Quarterly Revenues (US$ millions)
Turning now to the earnings of the G5 IP vendors in Q3 2010 (Table 4 below), we see more of a mixed bag than Table 3 revealed.
Indeed, the earnings for the G5 in Q3 2010 fell to only 31% of the earnings achieved in sequential Q2 2010 ($7.189 million vs. $22.960 million), as Q3 2010 losses by MOSY and RMBS almost obliterated the combined profits of ARMH, CEVA and MIPS.
Still, the meager $7.189 million total G5 black ink in Q3 2010 was more than enough to erase the $18.807 million of red ink amassed by the G5 a year ago in Q3 2009.
While all but MOSY did better in earnings year over year, only CEVA and MIPS managed to deliver more sequential profit in Q3 2010 than in Q2 2010.
Return on Sales (ROS) percentages still vary widely among the G5 IP vendors. For Q3 2010, for example, MIPS' ROS was nearly 34%, CEVA delivered nearly 28%, while ARM's was just over 14%. MOSY's net loss was 164% of its revenue figure for Q3 2010, and RMBS... well...one wonders whether ROS is even relevant for Rambus. [In Q3 2010, Rambus' net loss was - 64.9% of its revenue, but as recent as Q1 2010 Rambus' net ROS was over +93% ($150.4 million net income on $161.9 million in revenue), a result of being heavily in the technology licensing business].
G5 IP earnings comparisons to EDAC figures are not possible here, because EDAC does not release earnings data to non-members.
Table 4: G5 Public Electronics IP Companies’ Quarterly Earnings (US$ thousands)
G5 IP Vendor by Vendor Details for Q3 2010
On October 26. 2010 ARM Holdings plc announced its unaudited financial results for the third quarter and for the nine months ended September 30, 2010. Continuing adoption of ARM technology by leading semiconductor companies in a broad range of end-markets continued delivering strong revenues, profits and cash.
Financial Review (IFRS unless otherwise stated)
Total revenues in Q3 2010 were $158.1 million, up 28.5% versus Q3 2009 revenues of $123 million, and up 5.5% vs. sequential Q2 2010 revenues of $149.9 million.
Three quarters year-to-date dollar revenues amounted to $451.7 million, up 29% on 2009.
Total dollar license revenues in Q3 2010 increased by 33% year-on-year to $52.7 million, representing 33% of group revenues. License revenues comprised $42.2 million from PD (PD = Processor Division = the original ARM) and $10.5 million from PIPD (PIPD = Physical IP Division = originally the Artisan company).
Total dollar royalty revenues in Q3 2010 increased year-on-year by 31% to $81.7 million, representing 52% of group revenues. Royalty revenues comprised $70.4 million from PD and $11.3 million from PIPD.
Royalties are recognized one quarter in arrears, with royalties in Q3 generated from semiconductor unit shipments in Q2.
PD royalty revenues in Q3 2010 increased 33% year-on-year. This compares with industry revenues increasing by about 25% in the shipment period (i.e. Q2 2010 compared to Q2 2009), demonstrating ARM's continuing market share gains over the last 12 months.
Total PIPD royalties of $11.3 million included $0.6 million of catch-up royalties. Underlying royalty revenues increased by 16% year-on-year.
Development Systems and Service Revenues
Sales of development systems in Q3 2010 were $15.6 million, an increase of 11% year-on-year and representing 10% of group revenues. Three large software tools deals were signed during the quarter and, given that deals of this type are infrequent, development system revenues in Q4 2010 are expected to be closer to Q2 2010 revenues of $13.4 million.
Service revenues in Q3 2010 were $8.1 million, an increase of 15% year-on-year and representing 5% of group revenues.
Earnings under IFRS in Q3 2010 were $23,379,000 vs. $11,301,000 in Q3 2009. Sequential Q2 2010 earnings were $32,844,000.
Net cash at 30 September 2010 was £251.9 million ($398 million) compared to £202.3 million ($331.8 million) at 30 June 2010. Normalized free cash flow in Q3 2010 was £65.0 million ($102.7 million).
Progress on Key Growth Drivers
Growth in mobile applications - ARM opportunity increasing with mobile phones, smart phones and now mobile computers growing strongly
o 900 million ARM®-processor based chips were shipped in mobile devices
o 4 processor licenses signed for mobile phone and computing applications
Growth beyond mobile - Increased share in target markets such as consumer electronics and embedded products
o 600 million ARM-processor based chips shipped in everything from toys to televisions, cameras to cars
o 18 processor licenses signed for a broad range of applications including advanced processors for use in new markets such as network infrastructure and sensors
Growth in new technology outsourcing
o 3 licenses for royalty-bearing platforms of physical IP at advanced nodes and mature nodes including TSMCm, as previously reported
o 2 licenses for Mali™, ARM's advanced graphics processor
Warren East, Chief Executive Officer, said, “Q3 was a good quarter for ARM. Not only are we benefiting from growth in applications where we are the established market leader, including in smart phones and mobile computers, but we are gaining share in markets like digital TV and microcontrollers. Our partners are also starting to develop chips in new markets for ARM, such as servers and laptops, creating longer-term opportunities. In addition, both physical IP and Mali graphics performed well with important license wins and increasing royalty revenues. Given the broadening growth opportunities that are available to us, we have accelerated investment in R&D in the first nine months of the year whilst also increasing both profits and cash generation."
“We enter the final quarter of 2010 with positive momentum and we expect sequential group dollar revenue growth in the fourth quarter.
Looking further ahead, despite an uncertain macro-economic environment, ARM remains well positioned for growth with leading semiconductor companies increasingly adopting ARM technology for a broadening range of end-markets.”
As of September 30, 2010, ARM had 1,861 full-time employees, a net increase of 151 since the start of the year, mainly engineers going into ARM's processor R&D team. At the end of Q3, the group had 773 employees based in the UK, 496 in the USA, 219 in Continental Europe, 272 in India and 101 in the Asia Pacific region. Given the broad range of opportunities, ARM is investing in its R&D programs and operations, and expects some further recruitment in Q4 2010.
Principal Risks and Uncertainties
The principal risks and uncertainties faced by the Group that could affect the results for the first nine months of 2010 and beyond are noted within the Annual Report on Form 20-F for the fiscal year ended 31 December 2009. There have been no changes to these risks that would materially impact the Group in the foreseeable future. These include but are not limited to: ARM's quarterly results may fluctuate significantly and be unpredictable which could adversely affect the market price of ARM ordinary shares; general economic conditions may reduce ARM's revenues and harm its business; and ARM
competes in the intensely competitive semiconductor market.
According to Wikipedia
The acronym ARM originally stood for Acorn RISC Machine. The company name ARM stands for Advanced RISC Machines. This name was changed, around the time of the company's IPO, to "ARM Holdings", since it was felt the term RISC, which indicates a type of CPU design, being phonetically identical to "risk," would deter people unfamiliar with computers.
Warren East was appointed Chief Executive Officer of ARM Holdings in October 2001. For this role he is paid an annual salary of £415,000 and an annual bonus of £286,501. Hence his total annual remuneration is £701,500, or more than $1.1 million. No date for which this info was valid, was given.
ARM self description
ARM designs the technology that lies at the heart of advanced digital products, from wireless, networking and consumer entertainment solutions to imaging, automotive, security and storage devices. ARM's comprehensive product offering includes 32-bit RISC microprocessors, graphics processors, video engines, enabling software, cell libraries, embedded memories, high-speed connectivity products, peripherals and development tools. Combined with comprehensive design services, training, support and maintenance, and the company's broad Partner community, they provide a total system solution that offers a fast, reliable path to market for leading electronics companies. More information on ARM is available at http://www.arm.com/.
Chart courtesy Yahoo Finance
ARM News Item
Broadcom Readying Chip for Low-cost Android Smart Phones
Broadcom is working on a dual-core processor that will allow smart phone makers to build Android-based handsets with integrated Wi-Fi hotspots, the company said...
By Mikael Ricknäs PC World
December 14, 2010
Broadcom is working on a dual-core processor that will allow smart phone makers to build Android-based handsets with integrated Wi-Fi hotspots, the company said. It's billing the chip as aimed at mass-market phones with a low price point.
The Broadcom BCM2157, which is based on a dual-core ARM processor running at 500MHz, is now shipping to "early access customers", according to the chip maker. The first smart phones using the processor are expected to be launched next quarter, likely to coincide with the Mobile World Congress conference in Barcelona in February 2011. Broadcom said in a statement that smart phones based on the new processor will be affordable, but it did not offer details on its component pricing.
Besides integrated Wi-Fi hotspots, smart phones based on the processor can be equipped with multi-touch screens, 5-megapixel cameras and HSDPA (High-Speed Downlink Packet Access) at 7.2M bps (bits per second). Smart phones based on the processor will also be able to use two SIM (subscriber identity module) cards, which combined with a lower price will help convince phone buyers in developing countries to pick up smart phones. Using two SIM cards is also growing in popularity in some parts of Europe, according to Francisco Jeronimo, research manager at IDC.
The availability of lower-cost smart phones has already helped increase Android's popularity, according to Jeronimo. In general, the trend towards even cheaper smart phones will continue in 2011, and Android-based products will play an important role in helping bring down prices even further, Jeronimo said.
On October 26. 2010 CEVA, Inc. (NASDAQ: CEVA); (LSE: CVA) announced its financial results for the third quarter ended September 30, 2010.
Total revenue for the third quarter of 2010 was a record $10.7 million, an increase of 11% compared to $9.7 million reported for the third quarter of 2009, and an increase of slightly less than 1% over the just prior second quarter of 2010.
Third quarter of 2010 licensing revenue was $4.5 million, a decrease of 15% compared to $5.2 million reported for the third quarter of 2009. Royalty revenue for the third quarter of 2010 was $5.2 million, an increase of 42% over $3.7 million reported for the third quarter of 2009. Revenue from services for the third quarter of 2010 was $1 million, an increase of 35% from $0.7 million reported for the third quarter of 2009.
Gideon Wertheizer, Chief Executive Officer of CEVA, stated: "We are pleased with our solid performance in the third quarter, including a strategic agreement for the CEVA-XC DSP with a leading semiconductor company, a new powerhouse in the wireless space. Our royalty revenue continues to grow, and we reached a new record high market share of 33% for the worldwide handset cellular baseband market."
"Furthermore, due to projections for stronger than expected shipments of products incorporating our technologies by a few of our customers in the third quarter, we currently anticipate significant sequential increase our fourth quarter royalty revenue," continued Mr. Wertheizer.
U.S. GAAP net income for the third quarter of 2010 was $3.0 million, an increase of 71% compared to $1.8 million reported for the same period in 2009, and up almost 41% sequentially. U.S. GAAP diluted earnings per share for the third quarter of 2010 was $0.13, an increase of 44% compared to $0.09 reported for the third quarter of 2009.
During the quarter, the Company concluded six new licensing agreements. Five agreements were for CEVA DSP cores, platforms and software, and one agreement was for CEVA Bluetooth technology. Target applications for customer deployment are 3G/4G handset and mobile broadband processors, smart metering systems, and Android-based application processors for smart phones, tablets and e-readers. Geographically, two of the agreements signed were in the U.S., three were in Asia and one was in Europe.
Yaniv Arieli, Chief Financial Officer of CEVA, stated: "Our third quarter financial performance demonstrated continued progress towards our long term profitability milestones. We reached a new record high royalty revenue for the fourth consecutive quarter and also recorded all-time highs for GAAP operating margins, which was driven by solid top line growth aligned with on-going expense management. In addition, we continued to generate significant positive cash flow during the quarter which further enhances our already strong balance sheet. As of September 30, 2010, CEVA's cash balance, marketable securities and bank deposits were $117.2 million, an increase of 8% from the second quarter of 2010."
CEVA, Inc. self description
CEVA is the world's leading licensor of silicon intellectual property (SIP) DSP cores and platform solutions for the mobile handsets, portable and consumer electronics markets. CEVA's IP portfolio includes comprehensive technologies for cellular baseband (2G / 3G / 4G), multimedia, HD video and audio, voice over packet (VoP), Bluetooth, Serial Attached SCSI (SAS) and Serial ATA (SATA). In 2009, CEVA's IP was shipped in over 330 million devices, powering handsets from 7 out of the top 8 handset OEMs, including LG, Motorola, Nokia, Samsung, Sony Ericsson and ZTE. Today, one in every three handsets shipped worldwide is powered by a CEVA DSP core. For more information, visit www.ceva-dsp.com.
Chart courtesy Yahoo Finance
CEVA News Item
CEVA Announces Licensing Agreement with PMC-Sierra for Voice-Over-IP Platform to Enable VoIP in Fiber-to-the-Home SoC Solutions
Powered by CEVA-TeakLite-II DSP core, CEVA-VoP™ brings lowest cost per channel VoIP capabilities to PMC-Sierra's GPON products
On December 14, 2010 CEVA, Inc. (NASDAQ: CEVA); (LSE: CVA), announced that PMC-Sierra (NASDAQ: PMCS), the premier Internet infrastructure semiconductor solution provider, had licensed its CEVA-VoP™ voice-over-IP platform for use in PMC-Sierra's next generation system-on-chip (SoC) devices for Fiber-To-The-Home applications.
CEVA-VoP is a complete hardware and software VoIP solution based on the CEVA-TeakLite-II DSP, designed to be deployed in integrated networking and VoP SoCs.
The CEVA-VoP platform is built on top of the widely adopted, fully programmable CEVA-TeakLite-II low-cost DSP engine, and the Xpert-TeakLite-II integrated subsystem - with cached memory, peripherals, and system interfaces - capable of handling multiple, simultaneous voice channels on a single core. The solution includes a fully integrated VoIP software suite, including speech compression and decompression, echo cancellation, telephony functions, and signaling/networking. The incorporated software is open, allowing design licensees to add proprietary algorithms and broaden the use of the design to other markets or applications.
"We required a complete hardware plus software VoIP solution that can be efficiently integrated within our SoC architecture and provide the necessary performance, power and cost efficiencies required in the competitive EPON and GPON markets," said Ofer Bar-Or, PMC-Sierra's vice president and co-general manager, FTTH division. "CEVA's proven VoIP platform provides our EPON and GPON products with the required technology to enable multiple simultaneous voice channels and signal processing functions in our VoIP-enabled SoCs."
"We are pleased that PMC-Sierra has adopted our DSP-based platform to provide VoIP functionality," said Gideon Wertheizer, CEO of CEVA. "The flexibility of the CEVA solution is well suited to support PMC-Sierra's evolving needs as it continues to enhance its product lines with additional VoIP functionality."
About PMC-Sierra, Inc.
PMC-Sierra®, the premier Internet infrastructure semiconductor solution provider, offers its customers technical and sales support worldwide through a network of offices in North America, Europe, Israel and Asia. PMC-Sierra provides semiconductor solutions for Enterprise and Channel Storage, Wide Area Network Infrastructure, Fiber-To-The-Home, and Laser Printer/Enterprise market segments. The Company is publicly traded on the NASDAQ Stock Market under the PMCS symbol. For more information, visit www.pmc-sierra.com.
On October 25, 2010 MIPS Technologies, Inc. (NASDAQ: MIPS), reported consolidated financial results for Q3 2010, its first fiscal quarter, ended September 30, 2010. All financial results are reported in U.S. GAAP unless otherwise noted.
Summary Q3 2010 Financial Highlights
Revenue was $22.589 million, a year-to-year increase of 50.79% over $14.980 million in Q3 2009, but down almost 3% from the just prior Q2 2010.
Licensee royalty units grew to 157 million units from 106 million units in Q3 2009.
Q3 2010 GAAP net income was $7.616 million or $0.16 per share; up $7.021 million year-to-year over $0.595 million in Q3 2009 or $0.01 per share, and up $1.696 million over sequential Q2 2010.
Cash and investment balances ended the quarter at $65.2 million, a year-to-year increase of $21.7 million.
Revenue from royalties was $13.6 million, an increase of 40% from the third quarter a year ago. License revenue was $8.9 million, an increase of 71% from the $5.2 million reported in the 3rd quarter a year ago.
"Our financial performance in the first quarter continues to demonstrate our momentum across all of our target markets. This momentum includes the addition of new licensees in the quarter that are developing chips for mobile solutions. Both our royalty revenue and our license revenue exceeded our expectations during the quarter," said Sandeep Vij, MIPS Technologies chief executive officer.
MIPS Technologies, Inc. self description
MIPS Technologies, Inc. (NASDAQ: MIPS) is a leading provider of industry-standard processor architectures and cores that power some of the world's most popular products for the home entertainment, communications, networking and portable multimedia markets. These include broadband devices from Linksys, DTVs and digital consumer devices from Sony, DVD recordable devices from Pioneer, digital set-top boxes from Motorola, network routers from Cisco, 32-bit microcontrollers from Microchip Technology and laser printers from Hewlett-Packard. Founded in 1998, MIPS Technologies is headquartered in Sunnyvale, California, with offices worldwide. For more information, contact (408) 530-5000 or visit www.mips.com.
Chart courtesy Yahoo Finance
MIPS News Item
MIPS Wins OCP-IP Contributor of the Year Award
On November 30, 2010 the Open Core Protocol International Partnership (OCP-IP) announced MIPS Technologies (NASDAQ: MIPS) wa the recipient of the annual Outstanding Contributor of the Year Award for 2010. The OCP-IP Governing Steering Committee grants this award each year to a member that makes key contributions to the further advancement of the OCP specification or supporting infrastructure.
The committee acknowledged MIPS Technologies for its leadership, commitment and contribution to OCP-IP's Specification Working Group. The Company played a key role in completing development of the cache coherence extensions included in OCP 3.0. OCP 3.0 coherence extensions enable hardware-based coherence among the wide variety of heterogeneous CPUs, DSPs, accelerators and streaming input/output devices that characterize advanced SoCs.
The OCP extensions differ from traditional coherence approaches by cleanly separating the primitive operations associated with maintaining coherence from the specific system-level approach for implementing the communication and storage aspects of a coherent system. This extends a key advantage of OCP - the ability to develop IP cores independently from the system in which they will be used - into the domain of cache coherent systems. In particular, the OCP coherence extensions have been validated against both invalidate-based snoopy and directory-based coherence schemes. A detailed technical article on cache coherence is available here.
MIPS Technologies leveraged the new Cache Coherence feature in its multithreaded, multiprocessing MIPS32® 1004KTM Coherent Processing System (CPS) and its new superscalar MIPS32 1074KTM CPS-multicore processors that provide two paths to performance, depending on the application.
"We are pleased to be named Contributor of the Year by the OCP-IP," said Art Swift, vice president of marketing and business development, MIPS Technologies. "Working with other leading companies in the OCP-IP community, we are creating standard interfaces that are critical for the next generation of multiprocessor products."
Work on OCP 3.0 was executed by members of the OCP-IP Specification Working Group including: MIPS Technologies, Nokia, Sonics Inc., Texas Instruments, Toshiba and other industry-leading companies.
"OCP 3.0 and the cache coherence extensions are an excellent example of the productive cooperation we routinely achieve between member companies. We are grateful for the tremendous effort and contributions provided by MIPS Technologies, and we thank them for their efforts," said Ian Mackintosh, president OCP-IP. "We are pleased to present them with the Outstanding Contributor Award and look forward to continued partnership in the future."
OCP-IP self description
Formed in 2001, OCP-IP is a non-profit corporation promoting, supporting and delivering the only openly licensed, core-centric protocol comprehensively fulfilling integration requirements of heterogeneous multicore systems. The Open Core Protocol (OCP) facilitates IP core reusability and reduces design time, risk, and manufacturing costs for all SoC and electronic designs by providing a comprehensive supporting infrastructure. For additional background and membership information, visit www.OCPIP.org.
NOTE: MIPS, MIPS32, 1074K and 1004K are trademarks or registered trademarks in the United States and other countries of MIPS Technologies, Inc. All other trademarks and service marks are the property of their respective owners.
On October 28, 2010 MoSys, Inc. (NASDAQ: MOSY) reported financial results for the third quarter ended September 30, 2010.
Third Quarter and Recent Highlights
- Reported total revenue of $3.78 million, an increase of 12.1% over the third quarter of 2009 revenue of $3.37 million, but down 11.6% from the just prior quarter revenue of $4.3 million;
- Ended the third quarter with total cash and investments of $22.3 million;
- Taped out the first Bandwidth Engine(TM) integrated circuit (IC) (BE-1) in mid-July 2010 and received packaged BE-1 units;
- Made solid progress on characterizing, testing and preparing BE-1 for sampling late fourth quarter 2010; and
- Announced the GigaChip(TM) Alliance, an ecosystem of semiconductor device suppliers supporting the GigaChip Interface.
"During the third quarter, revenue increased 12% over the third quarter of 2009, driven by revenue from our 1T-SRAM and high-speed interface SerDes and DDR3 IP," commented Len Perham, President and Chief Executive Officer of MoSys.
"Royalty revenue reflects continuing demand for our 1T-SRAM embedded memory solutions from licensees in the gaming and networking markets. We remain fully committed to our IP business. It will be our primary revenue generator in 2011, a key component of our long term growth plan, and it is, in fact, very synergistic with our Bandwidth Engine ICs.”
"As announced in late July, we completed the design and verification of BE-1, the first in a family of system derived memories aimed at next generation switching and routing platforms. Packaged BE-1 units were received in mid-October, and we are gratified with the progress we are making testing and characterizing this exciting new system solution. At this point, we continue to believe we will be sampling BE-1 late in the fourth quarter of 2010. Customer interest in BE-1 remains very strong. During the quarter, we continued to make progress on the formation of the GigaChip Alliance, an ecosystem of semiconductor device suppliers committed to supporting our GigaChip interface, and, over the coming months, we expect additional companies to join our efforts in further advancing serial high-speed chip-to-chip communications at the board level."
Mr. Perham concluded, "We continue to leverage our highly differentiated memory and high-speed interface IP to drive near- and long-term growth, while advancing the development of our Bandwidth Engine IC business. We are also focused on managing costs as we expand our business model to include fabless IC product offerings and bring an ever growing family of Bandwidth engine products to market."
Third Quarter Results
Total net revenue for the third quarter of 2010 was $3.8 million, compared with $4.3 million reported in the second quarter of 2010 and $3.4 million in the third quarter of 2009.
Third quarter 2010 total revenue included licensing revenue of $1.5 million, compared with $2.0 million for the previous quarter and $1.3 million for the third quarter of 2009. Third quarter 2010 royalty revenue was $2.3 million, compared with $2.3 million in the previous quarter and $2.0 million for the third quarter of 2009.
Gross margin for the third quarter of 2010 was 81%, compared with 87% for the second quarter of 2010 and 80% for the third quarter of 2009. The sequential decrease in gross margin was primarily related to additional customization costs incurred on certain licensing projects.
Total operating expenses on a GAAP basis for the third quarter of 2010 were $9.2 million, which total was consistent with the previous quarter and compared with $7.8 million for the third quarter of 2009. Third quarter 2010 operating expenses included $0.7 million of amortization of intangible assets and $0.8 million of stock-based compensation expense.
GAAP net loss for the third quarter of 2010 was $6.198 million, or ($0.19) per share, compared with a net loss of $5.427 million, or ($0.17) per share, for the previous quarter and a net loss of $4.956 million, or ($0.16) per share, for the third quarter of 2009.
Cash and investments totaled $22.3 million as of September 30, 2010, compared with $31.2 million as of June 30, 2010. The decrease in cash and investments includes payment in the third quarter of a $6.5 million earn-out related to the Prism acquisition.
MoSys, Inc. self description
MoSys, Inc. (NASDAQ: MOSY) is a leading provider of serial chip-to-chip communications solutions that deliver unparalleled bandwidth performance for next generation networking systems and advanced system-on-chip (SoC) designs. MoSys' Bandwidth Engine(TM) family of ICs combines the company's patented 1T-SRAM ® high-density memory technology with its high-speed 10 Gigabits per second (Gbps) SerDes interface (I/O) technology. A key element of Bandwidth Engine technology is the GigaChip(TM) Interface, an open, CEI-11 compatible interface developed to enable highly efficient serial chip-to-chip communications. MoSys' IP portfolio includes SerDes IP and DDR3 PHYs that support data rates from 1 - 11 Gbps across a variety of standards. In addition, MoSys offers its flagship, patented 1T-SRAM and 1T-Flash ® memory cores, which provide a combination of high-density, low power consumption, high-speed and low cost advantages for high-performance networking, computing, storage and consumer/graphics applications. MoSys IP is production-proven and has shipped in more than 325 million devices. MoSys is headquartered in Santa Clara, California. More information is available on MoSys' website at http://www.mosys.com.
MoSys, 1T-SRAM and 1T-Flash are registered trademarks of MoSys, Inc. The MoSys logo, Bandwidth Engine and GigaChip are trademarks of MoSys, Inc. All other marks mentioned herein are the intellectual property of their respective owners.
Chart courtesy Yahoo Finance
Mosys News Item
On Tuesday December 7, 2010 the Associated Press (AP) said that MoSys Inc. planned to raise nearly $20 million through the direct sale of nearly five million shares of its common stock.
The company said "a small number of investors" had agreed to buy nearly 4.5 million shares at $4 each. That marked a 9% discount to the stock's December 6th closing price of $4.38.
In addition, CEO Leonard Perham was planning to purchase 275,000 shares and a company director, Carl Berg, was planning to buy 230,000 shares, both at the market price of $4.38.
MoSys said the deals would generate net proceeds of $19.9 million after deducting the costs of the offering. The funding will be used for general corporate purposes, the company said.
The offering was expected to close Friday December 10, 2010.
MoSys shares rose 42 cents, or 9.6%, to close at $4.80 on December 7th, on volume more than twice normal daily trade.
End of AP December 7, 2010 story.
Note: MOSY closed January 7, 2011 at $5.81 per share.
On October 21, 2010 Rambus Inc. (NASDAQ:RMBS) reported financial results for the third quarter of 2010.
Revenue for the third quarter of 2010 was $31.743 million, down 18% sequentially from the second quarter of 2010 primarily due to lower patent royalty revenue. As compared to the revenue of $27.874 million third quarter of 2009, Q3 2010 revenue was up 13.88% primarily due to the revenue recognized from the agreements signed with Samsung during the first quarter of 2010.
Revenue for the nine months ended September 30, 2010 was $232.5 million, up 183% over the same period of last year which was also due to the agreements signed with Samsung during the first quarter of 2010.
“Revenue for the quarter was down sequentially as anticipated patent license renewals did not complete by quarter end; however, those negotiations are active and proceeding well,” said Harold Hughes, president and chief executive officer at Rambus. “During the quarter, we did sign a patent license agreement with Nvidia for certain memory controller patents on a going forward basis and expect to receive the first payment in November.”
Total operating costs and expenses for the third quarter of 2010 were $43.2 million, which included a $10.3 million gain related to the Samsung settlement, $7.5 million of stock-based compensation expenses and $1.2 million for previous stock-based compensation restatement and related legal expenses. This is compared to total operating costs and expenses for the second quarter of 2010 of $45.5 million, which included a $10.3 million gain related to the Samsung settlement, $7.9 million of stock-based compensation expenses and $1.6 million for previous stock-based compensation restatement and related legal expenses. General litigation expenses for the third quarter were $4.6 million, a decrease of $0.6 million from the second quarter of 2010.
Total operating costs and expenses in the third quarter of last year were $48.5 million, which included $7.7 million of stock-based compensation expenses and $0.1 million for previous stock-based compensation restatement and related legal expenses. General litigation expenses in the third quarter of 2010 decreased $7.3 million from the third quarter of 2009.
Total operating costs and expenses for the nine months ended September 30, 2010 were $48.5 million, which included a $116.5 million gain related to the Samsung settlement, $23.2 million of stock-based compensation expenses and $3.4 million for previous stock-based compensation restatement and related legal expenses. This is compared to total operating costs and expenses of $141.4 million for the same period of 2009, which included $24.0 million of stock-based compensation expenses and a net recovery of $14.0 million of previous stock-based compensation restatement and related legal expenses. General litigation expenses for the nine months ended September 30, 2010 were $16.9 million, a decrease of $28.1 million from the same period in 2009.
Interest and other expense, net, for the third quarter of 2010 was $4.6 million as compared to $3.4 million in the second quarter of 2010 and $6.8 million in the third quarter of 2009. Interest and other expense, net, for the nine months ended September 30, 2010 was $13.7 million as compared to $9.6 million for the same period of 2009.
During the quarter ended September 30, 2010, the Company paid withholding taxes of $4.1 million. The Company recorded a provision for income taxes of $4.4 million for the third quarter of 2010, which is primarily comprised of the withholding taxes. As the Company continues to maintain a valuation allowance against its U.S. deferred tax assets, the Company's tax provision is based on its anticipated cash tax payments related to the quarter. By comparison, the Company recorded a provision for income taxes of $2.4 million for the quarter ended June 30, 2010 and a provision for income taxes of $0.1 million for the quarter ended September 30, 2009.
During the nine months ended September 30, 2010, the Company paid withholding taxes of $50.9 million. The Company recorded a provision for income taxes of $52.5 million for the nine months ended September 30, 2010, which is primarily comprised of the withholding taxes. By comparison, the Company recorded a provision for income taxes of $0.1 million for the nine months ended September 30, 2009.
Net loss for the third quarter of 2010 was $20.6 million as compared to a net loss of $12.5 million in the second quarter of 2010 and a net loss of $27.5 million in the third quarter of 2009. Diluted net loss per share for the third quarter of 2010 was $0.18 as compared to a net loss per share of $0.11 in the second quarter of 2010 and a net loss per share of $0.26 for the third quarter of 2009.
Net income for the nine months ended September 30, 2010 was $117.8 million as compared to a net loss of $68.9 million for the same period of 2009. Diluted net income per share for the nine months ended September 30, 2010 was $1.01 as compared to a net loss per share of $0.66 for the same period of 2009.
Cash, cash equivalents, and marketable securities as of September 30, 2010 were $484.9 million, a decrease of approximately $112.7 million from June 30, 2010. During the third quarter of 2010, the Company entered into an Accelerated Share Repurchase agreement (“ASR”) to repurchase $90 million of the Company's common stock, with the Company paying such $90 million at the time of commencement of the ASR. Prior to the commencement of the ASR, the Company repurchased shares of its common stock having an aggregate value of $9.8 million. In addition, the Company used $3.3 million in the acquisition of intellectual property.
Rambus Inc. self descripton
Rambus is one of the world's premier technology licensing companies. Founded in 1990, the Company specializes in the invention and design of architectures focused on enhancing the end-user experience of computing, communications and consumer electronics applications. Additional information is available at www.rambus.com.
Chart courtesy Yahoo Finance
Rambus News Item
Rambus Updates Fourth Quarter Revenue Guidance
On December 6, 2010 Rambus Inc. (NASDAQ:RMBS) updated its guidance for the quarter ending December 31, 2010. As a result of the patent license agreement with Elpida announced earlier on this day, the Company revised its revenue guidance for the quarter to be between $85 million and $93 million. Rambus initially provided revenue guidance for the quarter in the range of $40 million and $50 million.
“The Elpida agreement is estimated to result in royalty payments of $180 million to Rambus over the next five years, including $47 million to be paid in the current quarter,” said Harold Hughes, president and chief executive officer of Rambus. “With this agreement, we now have more than half of the DRAM market licensed, providing system manufacturers more choices of supply for licensed DRAM products.”
TTM EDA and Electronics IP Margins & Market Caps
Table 1 above provided revenue numbers for Q3 2010 and the three prior quarters, listing each of the G5 EDA vendor's revenue results for each of those quarters. Table 2 provided earnings numbers for Q3 2010 and the three prior quarters, listing each of the G4 EDA vendor's earnings results for each of those quarters, for the four EDA vendors reporting Q3 2010 earnings.
Likewise, Table 3 provides revenue numbers for Q3 2010 and the three prior quarters, listing each of the G5 Electronics IP vendor's revenue results for each of those quarters. Table 4 provides earnings numbers for Q3 2010 and the three prior quarters, listing each of the G5 IP vendor's earnings results for each of those quarters.
To gain a side by side comparison of all nine vendors, in a format which combines the twelve trailing months (ttm) up to and including Q3 2010, along with the perspective offered by recent Market Capitalizations, we present below Table 5:
Table 5: G9 Public EDA & Electronics IP Vendors (US$)
The most disconcerting data point (to this writer) in Table 5, is that ARMH...whose revenue is only 17% of the combined revenues of Cadence, Magma, Mentor Graphics and Synopsys... that ARMH is valued by the stock market as being worth 1.24 times the combined market caps of Cadence, Magma, Mentor Graphics and Synopsys!
Parting News about Employment in the United States
Employment Numbers for December 2010
Released on January 7, 2011 by US Labor Department
The US Labor Department issued its jobs report for January 2011 on February 4, 2011. Statistically the US unemployment rate fell to 9%, which if accurate means the US unemployment rate has fallen by eight-tenths of a percentage point in the past two months. That would be the steepest two-month drop in nearly 53 years. Manufacturing added 49,000 jobs in January 2011, the most since August 1998. And retailers added 28,000 jobs, the largest number in a year. Poor weather across much of the country played a role in the January numbers, so we’ll be anxious to see the changes in the numbers as the next few months of improving weather unfold.
Footnote : Remarks of President Barack Obama of January 12, 2011 - as prepared for delivery and released by the White House for the Memorial Service for the Victims of the January 8th Shooting in Tucson, Arizona.
When giving the actual speech, the president updated the section on visiting the congresswoman in the hospital, after "she opened her eyes for the first time":
To the families of those we've lost; to all who called them friends; to the students of this university, the public servants gathered tonight, and the people of Tucson and Arizona: I have come here tonight as an American who, like all Americans, kneels to pray with you today, and will stand by you tomorrow.
There is nothing I can say that will fill the sudden hole torn in your hearts. But know this: the hopes of a nation are here tonight. We mourn with you for the fallen. We join you in your grief. And we add our faith to yours that Representative Gabrielle Giffords and the other living victims of this tragedy pull through.
As Scripture tells us:
There is a river whose streams make glad the city of God,
the holy place where the Most High dwells.
God is within her, she will not fall;
God will help her at break of day.
On Saturday morning, Gabby, her staff, and many of her constituents gathered outside a supermarket to exercise their right to peaceful assembly and free speech. They were fulfilling a central tenet of the democracy envisioned by our founders - representatives of the people answering to their constituents, so as to carry their concerns to our nation's capital. Gabby called it "Congress on Your Corner" - just an updated version of government of and by and for the people.
That is the quintessentially American scene that was shattered by a gunman's bullets. And the six people who lost their lives on Saturday - they too represented what is best in America.
Judge John Roll served our legal system for nearly 40 years. A graduate of this university and its law school, Judge Roll was recommended for the federal bench by John McCain twenty years ago, appointed by President George H.W. Bush, and rose to become Arizona's chief federal judge. His colleagues described him as the hardest-working judge within the Ninth Circuit. He was on his way back from attending Mass, as he did every day, when he decided to stop by and say hi to his Representative. John is survived by his loving wife, Maureen, his three sons, and his five grandchildren.
George and Dorothy Morris - "Dot" to her friends - were high school sweethearts who got married and had two daughters. They did everything together, traveling the open road in their RV, enjoying what their friends called a 50-year honeymoon. Saturday morning, they went by the Safeway to hear what their Congresswoman had to say. When gunfire rang out, George, a former Marine, instinctively tried to shield his wife. Both were shot. Dot passed away.
A New Jersey native, Phyllis Schneck retired to Tucson to beat the snow. But in the summer, she would return East, where her world revolved around her 3 children, 7 grandchildren, and 2 year-old great-granddaughter. A gifted quilter, she'd often work under her favorite tree, or sometimes sew aprons with the logos of the Jets and the Giants to give out at the church where she volunteered. A Republican, she took a liking to Gabby, and wanted to get to know her better.
Dorwan and Mavy Stoddard grew up in Tucson together - about seventy years ago. They moved apart and started their own respective families, but after both were widowed they found their way back here, to, as one of Mavy's daughters put it, "be boyfriend and girlfriend again." When they weren't out on the road in their motor home, you could find them just up the road, helping folks in need at the Mountain Avenue Church of Christ. A retired construction worker, Dorwan spent his spare time fixing up the church along with their dog, Tux. His final act of selflessness was to dive on top of his wife, sacrificing his life for hers.
Everything Gabe Zimmerman did, he did with passion - but his true passion was people. As Gabby's outreach director, he made the cares of thousands of her constituents his own, seeing to it that seniors got the Medicare benefits they had earned, that veterans got the medals and care they deserved, that government was working for ordinary folks. He died doing what he loved - talking with people and seeing how he could help. Gabe is survived by his parents, Ross and Emily, his brother, Ben, and his fiancée, Kelly, who he planned to marry next year.
And then there is nine year-old Christina Taylor Green. Christina was an A student, a dancer, a gymnast, and a swimmer. She often proclaimed that she wanted to be the first woman to play in the major leagues, and as the only girl on her Little League team, no one put it past her. She showed an appreciation for life uncommon for a girl her age, and would remind her mother, "We are so blessed. We have the best life." And she'd pay those blessings back by participating in a charity that helped children who were less fortunate.
Our hearts are broken by their sudden passing. Our hearts are broken - and yet, our hearts also have reason for fullness.
Our hearts are full of hope and thanks for the 13 Americans who survived the shooting, including the congresswoman many of them went to see on Saturday. I have just come from the University Medical Center, just a mile from here, where our friend Gabby courageously fights to recover even as we speak. And I can tell you this - she knows we're here and she knows we love her and she knows that we will be rooting for her throughout what will be a difficult journey.
And our hearts are full of gratitude for those who saved others. We are grateful for Daniel Hernandez, a volunteer in Gabby's office who ran through the chaos to minister to his boss, tending to her wounds to keep her alive. We are grateful for the men who tackled the gunman as he stopped to reload. We are grateful for a petite 61-year-old, Patricia Maisch, who wrestled away the killer's ammunition, undoubtedly saving some lives. And we are grateful for the doctors and nurses and emergency medics who worked wonders to heal those who'd been hurt.
These men and women remind us that heroism is found not only on the fields of battle. They remind us that heroism does not require special training or physical strength. Heroism is here, all around us, in the hearts of so many of our fellow citizens, just waiting to be summoned - as it was on Saturday morning.
Their actions, their selflessness, also pose a challenge to each of us. It raises the question of what, beyond the prayers and expressions of concern, is required of us going forward. How can we honor the fallen? How can we be true to their memory?
You see, when a tragedy like this strikes, it is part of our nature to demand explanations - to try to impose some order on the chaos, and make sense out of that which seems senseless. Already we've seen a national conversation commence, not only about the motivations behind these killings, but about everything from the merits of gun safety laws to the adequacy of our mental health systems. Much of this process, of debating what might be done to prevent such tragedies in the future, is an essential ingredient in our exercise of self-government.
But at a time when our discourse has become so sharply polarized - at a time when we are far too eager to lay the blame for all that ails the world at the feet of those who think differently than we do - it's important for us to pause for a moment and make sure that we are talking with each other in a way that heals, not a way that wounds.
Scripture tells us that there is evil in the world, and that terrible things happen for reasons that defy human understanding. In the words of Job, "when I looked for light, then came darkness." Bad things happen, and we must guard against simple explanations in the aftermath.
For the truth is that none of us can know exactly what triggered this vicious attack. None of us can know with any certainty what might have stopped those shots from being fired, or what thoughts lurked in the inner recesses of a violent man's mind.
So yes, we must examine all the facts behind this tragedy. We cannot and will not be passive in the face of such violence. We should be willing to challenge old assumptions in order to lessen the prospects of violence in the future.
But what we can't do is use this tragedy as one more occasion to turn on one another. As we discuss these issues, let each of us do so with a good dose of humility. Rather than pointing fingers or assigning blame, let us use this occasion to expand our moral imaginations, to listen to each other more carefully, to sharpen our instincts for empathy, and remind ourselves of all the ways our hopes and dreams are bound together.
After all, that's what most of us do when we lose someone in our family - especially if the loss is unexpected. We're shaken from our routines, and forced to look inward. We reflect on the past. Did we spend enough time with an aging parent, we wonder. Did we express our gratitude for all the sacrifices they made for us? Did we tell a spouse just how desperately we loved them, not just once in awhile but every single day?
So sudden loss causes us to look backward - but it also forces us to look forward, to reflect on the present and the future, on the manner in which we live our lives and nurture our relationships with those who are still with us. We may ask ourselves if we've shown enough kindness and generosity and compassion to the people in our lives. Perhaps we question whether we are doing right by our children, or our community, and whether our priorities are in order. We recognize our own mortality, and are reminded that in the fleeting time we have on this earth, what matters is not wealth, or status, or power, or fame - but rather, how well we have loved, and what small part we have played in bettering the lives of others.
That process of reflection, of making sure we align our values with our actions - that, I believe, is what a tragedy like this requires. For those who were harmed, those who were killed - they are part of our family, an American family 300 million strong. We may not have known them personally, but we surely see ourselves in them. In George and Dot, in Dorwan and Mavy, we sense the abiding love we have for our own husbands, our own wives, our own life partners. Phyllis - she's our mom or grandma; Gabe our brother or son. In Judge Roll, we recognize not only a man who prized his family and doing his job well, but also a man who embodied America's fidelity to the law. In Gabby, we see a reflection of our public spiritedness, that desire to participate in that sometimes frustrating, sometimes contentious, but always necessary and never-ending process to form a more perfect union.
And in Christina...in Christina we see all of our children. So curious, so trusting, so energetic and full of magic.
So deserving of our love.
And so deserving of our good example. If this tragedy prompts reflection and debate, as it should, let's make sure it's worthy of those we have lost. Let's make sure it's not on the usual plane of politics and point scoring and pettiness that drifts away with the next news cycle.
The loss of these wonderful people should make every one of us strive to be better in our private lives - to be better friends and neighbors, co-workers and parents. And if, as has been discussed in recent days, their deaths help usher in more civility in our public discourse, let's remember that it is not because a simple lack of civility caused this tragedy, but rather because only a more civil and honest public discourse can help us face up to our challenges as a nation, in a way that would make them proud. It should be because we want to live up to the example of public servants like John Roll and Gabby Giffords, who knew first and foremost that we are all Americans, and that we can question each other's ideas without questioning each other's love of country, and that our task, working together, is to constantly widen the circle of our concern so that we bequeath the American dream to future generations.
I believe we can be better. Those who died here, those who saved lives here - they help me believe. We may not be able to stop all evil in the world, but I know that how we treat one another is entirely up to us. I believe that for all our imperfections, we are full of decency and goodness, and that the forces that divide us are not as strong as those that unite us.
That's what I believe, in part because that's what a child like Christina Taylor Green believed. Imagine: here was a young girl who was just becoming aware of our democracy; just beginning to understand the obligations of citizenship; just starting to glimpse the fact that someday she too might play a part in shaping her nation's future. She had been elected to her student council; she saw public service as something exciting, something hopeful. She was off to meet her congresswoman, someone she was sure was good and important and might be a role model. She saw all this through the eyes of a child, undimmed by the cynicism or vitriol that we adults all too often just take for granted.
I want us to live up to her expectations. I want our democracy to be as good as she imagined it. All of us - we should do everything we can to make sure this country lives up to our children's expectations.
Christina was given to us on September 11th , 2001, one of 50 babies born that day to be pictured in a book called "Faces of Hope." On either side of her photo in that book were simple wishes for a child's life. "I hope you help those in need," read one. "I hope you know all of the words to the National Anthem and sing it with your hand over your heart. I hope you jump in rain puddles."
If there are rain puddles in heaven, Christina is jumping in them today. And here on Earth, we place our hands over our hearts, and commit ourselves as Americans to forging a country that is forever worthy of her gentle, happy spirit.
May God bless and keep those we've lost in restful and eternal peace. May He love and watch over the survivors. And may He bless the United States of America.
End of Footnote 
About the Writer:
Since 1996, Dr. Russ Henke has been and remains active as 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. 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 ninety-three (93) 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, are available at http://www.henkeassociates.net. March 31, 2011 will mark the 15th Anniversary of the founding of HENKE ASSOCIATES.