Innoveda rises from merger to seek EDA lead
By Richard Goering
EE Times
(02/21/00, 10:02 a.m. EST)
MARLBORO, Mass. ? With a goal of becoming a system-design powerhouse, the company emerging from the combination of Viewlogic Systems and Summit Design will step forward this week under a new banner. Called Innoveda (pronounced "in-oh-VAY-dah"), the publicly held company takes its name from the innovation it pledges to bring to the EDA industry.
Although the merger of Summit and Viewlogic has been approved by the Securities and Exchange Commission, it still must be finalized by stockholders from both companies at a March 20 meeting. Assuming all goes well, Innoveda is poised to begin its life as the fifth-largest U.S. EDA vendor, following Cadence, Mentor Graphics, Synopsys and Avanti.
"We want to focus on innovation," said Will Herman, president and chief executive officer of Viewlogic (Marlboro, Mass.), and of Innoveda. "We're moving upstream into the system-design marketplace, and we really believe there needs to be some breakthroughs in order to make that a practical move."
The new company, however, still faces the question raised by competitors and analysts when the merger was announced in September 1999: Is there a consistent message, given the diversity of tools fielded by Viewlogic and Summit?
Innoveda will continue offering all existing tools, including Viewlogic's products for pc-board analysis and PLD/FPGA design, and Summit's ASIC design tools for graphical design entry, hardware-software co-verification and simulation debugging. But in Herman's view, the new company's future lies at a higher level.
"Over the long term, we see a shift to higher-leverage, front-end tools enabled by analysis and verification," Herman said. "This will include not only products, but services as well." What Innoveda seeks to offer, said Herman, is tools that let hardware and software designers make trade-offs very early in the design cycle, evaluating such criteria as timing and signal integrity.
The creation of Innoveda follows a difficult year for the publicly held Summit (Beaverton, Ore.), which saw its revenue decline from $43 million in 1998 to $30 million in 1999. Summit lost most of its sales and marketing force, and considerable ground, after a failed merger attempt with OrCAD. But the pared-down company's 1999 fourth quarter yielded a profit of 10 cents per share.
Because Viewlogic is privately held, technically it is the smaller Summit that is acquiring the larger Viewlogic. Still, Viewlogic personnel will make up most of Innoveda's management team and board of directors. The Summit symbol, SMMT, will be replaced by the new INOV symbol on NASDAQ following the March 20 stockholders meeting.
Viewlogic is profitable, and its S-4 form shows revenue of $41 million through the third quarter of 1999. John Barr, analyst at Needman and Co., said he expects the combined company will show around 10 percent revenue growth and a 20 percent operating margin in 2000, with annual revenue in the $100 million range.
Missing pieces?
Yet some still question whether Innoveda can field a coherent set of tools. Daya Nadamuni, an analyst at Dataquest Inc., said the company is offering a "mixed message" and lacks some of the tools needed for a complete design flow.
"The new company is essentially bringing two sets of products together that are targeted at different markets," Nadamuni said. "By not targeting the ASIC design flow, Innoveda will essentially be going after the lower-mainstream, late-adopter market, where there is good demand for Viewlogic products. But there may not be that much demand for the high-level Summit products."
One way to define Innoveda is to look at the items it is not offering, among them synthesis and IC physical design. The company's eye is on systems, not chips. Most EDA companies focus specifically on chip design, Herman noted; But Innoveda is different, because it will tackle the rest of the design problem, he said.
"Most EDA revenue comes from [sales to] 50 or 100 companies," Herman said. "Some produce silicon only, but very few. Most produce an end product, including chips, interconnect and packaging, and all this has to be pulled together."
The place of highest leverage is early in the design cycle, where system-level trade-offs can be made. Viewlogic's eArchitect product, a prototyping tool that supports hardware-software partitioning and processor selection, is the current offering that's perhaps most symbolic of where Innoveda is heading.
Summit's VisualHDL product is widely used for high-level design capture, and a forthcoming tool, VisualSLD, will offer a more complete system-level design environment. Summit's V-CPU hardware-software co-verification tool also fits into the system-level design area.
These offerings will be supported by existing Viewlogic tools that help board designers make early decisions about topics like timing, crosstalk and ground plane design.
Herman said Innoveda's offerings will probably compete most closely with the tools that are being developed under Cadence Design Systems' Felix initiative. Companies like C Level Design, CoWare and Frontier Design are less directly competitive, he said, because they focus more specifically on chip design.
Innoveda will seek a cooperative relationship with Synopsys Inc. (Mountain View, Calif.), which formerly owned Viewlogic and still holds 15 percent of its stock.
Innoveda will employ around 460 people, of whom around 170 will come from Summit. Guy Moshe, general manager of Israeli operations, is the highest-ranking Summit person on board. Innoveda will retain Summit's R&D facilities in Israel and Minneapolis, but will shut down the headquarters in Beaverton, Ore.
Herman will be chairman of the Innoveda board of directors. The company will sell worldwide through direct sales, telesales and distributors. A new Web site, www.innoveda.com, is under construction.
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