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.