The convertible bond offering is an excellent deal.
Management has done an outstanding job shoring up the finances of the company. The secondary offering last summer doubled the available cash with only the minor penalty of 10% stock dilution. The bond offering will be repaid at a low interest rate with little chance of being converted into stock. As long as the profit margin on the invested proceeds exceeds the interest rate, the company will come out ahead.
Real estate speculation is not the bailiwick of the company, so I expect management to make an acquisition. Wind River needs to merge with Viewlogic (NASDAQ:VIEW), Mentor's main competition in HW/SW co-design tools. A Wind-Viewlogic combo would be a potent competitor to Mentor-Microtec. Wind River could easily acquire Viewlogic in a pooling of interests transaction. The market cap of Viewlogic is currently $262m and the market cap of Wind River is $1.1b.
According to the SI profile at techstocks.com, Viewlogic has earned $15.1m in the last 4 quarters with revenues of $141.8m. Wind River has earned $12.9m with revenues of $69.8m during the same time frame. So, it would be a great deal for the company, even if it was necessary to pay a large takeover premium.
For info on the Viewlogic Eagle HW/SW co-design tool, see viewlogic.com. For info on Mentor Graphics Seamless-CVE HW/SW co-design tool, see the presentation at mentorg.com. For info on the soft core standards setting body, the Virtual Socket Interface alliance, see vsi.org. For info on the soft cores industry, see the new magazine Virtual Chip Design at virtualchipdesign.com. EE Times produced a special report containing 7 articles on HW/SW co-design at techweb.cmp.com, including one you might find especially interesting, "Emulation optimizes telecom codesign" at techweb.cmp.com.
According to Mentor investor relations rep Dennis Weldon, Microtec and the Mentor Codesign Business Unit have worked together on datacom and telecom projects for Motorola, Nokia, Samsung, Hitachi, Intel, and others. Customer and partner testimonials are at mentorg.com. Cores (hard and soft) represent $40m of their revenues (about 10%). For more info, contact dennis_weldon@mentorg.com or (503) 685-1462.
Motorola offers a projection at their conference call for embedded systems software companies at merc.com
Motorola said, for example, the average number of semiconductors used in a car is expected to double between 1996 and 2001. One new model uses 700 chips, Ruiz said.
I hope you find some of the reading interesting. |
