Thursday, May 20, 2010
Wednesday, May 19, 2010
The blogosphere is afire with commentary on Cadence's acquisition of Denali, including
- Cadence to Acquire Denali: The Facts | Gabe on EDA
- Cadence to Acquire Denali: The Analysis | Gabe on EDA
- Cadence tries to avoid the Tality trap | Chris Edwards
Though I'm not a financial analyst, I do have reasonable familiarity with the stock market. And, being the thrifty guy that I am, I'm having trouble to justify Cadence's valuation of Denali. Pulling a quote from Gabe's analysis post, Denali had trailing twelve-month revenues of $43 million, implying a 6.3x EV/sales. Priced at over 6X Sales! For a company that's been around a number of years, and while it has a healthy business, is not forecast for hyper-growth? How do companies justify such valuations? (I'm asking sincerely--perhaps there's an analysis angle that makes this look like a good bet.)
The more I read, the more I scratch my head about whether this is a good venture for Cadence. Gotta give them credit for trying something outside the EDA product box, though. It seems they are gunning for Synopsys DesignWare IP business, and using Denali to give themselves a jump start.
Caveat: I haven't read Cadence's "EDA360 Manifesto", so I may not fully appreciate the cleverness of their overall strategy.
Friday, May 14, 2010
Though as an implementation guy, I don't use Denali products, the first things that sprang to mind are:
- $315 million is a lot of money! I think it must be one of the top 10 EDA acquisitions by price, if not top five.
Anyone have list of the top acquisitions in EDA? It'd be fascinating to review the list and how those deals turned out.
Off the top of my head guess list of bigger deals: CCT (Cadence), Ambit (Cadence), Avant! (Synopsys). Maybe ViewLogic (Synopsys), Verisity (Cadence).
- Cadence has been ambivalent or downright antagonistic toward the Design Automation Conference (DAC) in the past few years. Denali, on the other hand, is one of DAC's biggest boosters, and throws the party to attend in all of DAC. It will be tragic if Cadence clamps down on the festivities.
On a more somber note, let's hope that Cadence is able to preserve the technology and brain trust that was able to make Denali a well-established mid-level EDA vendor. Cadence has had mixed success in managing acquisitions, with some apparently not paying off (Ambit) and others holding up well (Verplex).