A large portion (as much as 50% I believe) of Cadence revenue
comes from Spectrum services (chip design and CAD software
consulting) That is where the majority growth is. The software
sales growth and revenue should be pretty slow comparitively.
Eventually, the consulting arm of Cadence could account for
as much as 75% of the revenue.
On the other hand, Avanti has very little prescence in the
consulting area. But that is another growth area for them.
Cadence right now has a monopoly, customers like variety.
You can't really look at pure revenue numbers to determine
market share because software revenue from both Cadence and
Avanti comes in the form of backlogs and maintnance fee
which are realized periodically. What I am saying is that
both of these companies has enough backlogs since 97 that
they pretty much garunteed themselves profitable quarters
in 98.
If I was Avanti, I'd get into the consulting business and
focus on TCAD/physical verification. Believe it or not,
physical verification is still a foreign concept for most
of design houses. Most of them know they eventually need it,
but they simply don't have the man power of the expertise in
dealing with it. This could be a very profitable business.
- Chung
>>>
I think this one gets some meat.
From YAHOO:
Prospect.
lptg
Jul 27 1998
5:12PM EDT
Let compare Avanti revenues and earnings the last two
quarters: eanings grew from 52 mils to 54 mils and it is
about 4 percent while Cadence grew from 270 mils to
292 mils and it is about 8 percent on a larger revenues
base.
From the revenues growth rate, it is telling us that
Avanti is slowing down compared to Cadence and probably
is losing market share too.
To break down on the growth rate by product category, we
would have a better picture:
- Placement and Route: traditionally biggest growth area,
Avanti is losing market share due to Cadence new products,
litigation and Avanti Aquarius/Apollo is technically
falling behind compared to Cadence Silicon Ensemble. For
the last two years, Avanti did not add any new/breakthrough
improvement to either Apollo/Aquarius product line
except changing to a new database and a new editor which
will not help customers tremendously in terms of productivity
gain. For Cadence Silicon Ensemble, they added a new
and much faster router, a faster placement program,
enhancement for deep submicron design, and much improved
GUI, and tigher links to the front end and timing tools.
According to dataquest, for the next 5 years, place and
route market will experience a strong growth due to
deep submicron designs and system on chip.
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