It’s been a rocky month for EDA.
On July 23rd Cadence revised strongly downward its revenue forecast for the last 6 month of 2008. Cadence stock plummeted 30% the next day. As a direct result, Cadence scrapped its takeover bid for Mentor Graphics this past Friday.
On July 24th Rambus reported Q2 revenue down 10% from Q1 and down 25% from Q2′07. Their closing price that day of $14.70 culminated a decline of almost one-third over the previous month. As a result, Rambus has announced its cutting 20% of its workforce.
On August 7th, Magma pre-announced that its Q1 revenue would be 10% lower than expected. Result: $6.77 => $5.45 (-19%).
And just last week, MIPs announced a $100M write-down due to “the softening overall market for intellectual property and delays experienced in realizing expected synergies” (with the Chipidea acquisition). With it, a 15% layoff.
And so, all eyes will be on Synopsys and Mentor this Wednesday. First, Mentor will announce Q2 earnings at a 5:30 AM (PDT) conference call. (Show of hands, who is getting up early for that one). Then, Synopsys will announce Q3 earnings at a more reasonable time, 2:00 PM (PDT).
A few things that I’ll be watching for:
- During Cadence’s earnings call, Mike Fister blamed most of their predicted revenue shortfall on their customers’ decision to postpone purchases in the face of uncertainty in their own businesses. This seems to be supported by the subsequent bad news from Magma, Rambus, and MIPs. If that is the case, expect to hear similar bad news and comments from Synopsys and Mentor. If not, then the finger will point back to Cadence.
- What will Mentor say about the withdrawn offer by Cadence? (Note: Mentor stock dropped 25% midday Friday after the news broke).
- Several analysts and observers (including myself) felt that Synopsys would benefit from the uncertainty caused by the Cadence - Mentor acquisition battle. I’ll be interested to see if Synopsys’ numbers show that or if there is any anecdotal information of a big customer switching to Synopsys as a result.
- This will be the 1st quarter since Synopsys acquired Synplicity, so look to see how that is going. From what I hear, Synopsys plans to keep the businesses mostly separate through the end of FY08 (October).
It should be an interesting week…
harry the ASIC guy