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Technology Stocks : Cadence Design Systems
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To: Chinacat who wrote (274)8/27/1998 7:00:00 PM
From: PMylnar  Read Replies (2) of 668
 
CDN/AMBIT.
1) CDN already owns 5% of Ambit at a valuation of $100mm
2) By paying $250mm for Ambit CDN would a)be able to take a huge "in-process R/D charge" , b)make their unreachable EPS goals for 1999, c) continue to spin Wall Street about how good business is on the product side.
3) What else does CDN get from this acquisition?: a) a lawsuit from SNPS claiming stolen technology (sounds familar) and best of all b)A 1-3% market share in the Synthesis market which isn't growing and whose total market is estimated at $150-$175mm per year!! Doesn't sound like a great use of cash. Pay $250mm for a business w/$15-25mm in revenue in a $150-$175mm low/no growth market. I can hear the spin now: "we'll have a complete end to end solution of EDA products...a suite of products like Microsoft and Network Associates. Customers are demanding this." Translation: our end markets are slowing and we have to buy revenues to grow our market share. Look at what has happened to NETA's stock ever since B. Larson started buying companies instead of focusing on the virus market. Zippo!! Investors don't believe it.
If CDN buys Ambit, they'll ruin the synthesis market for 1-2 years. They'll give away the product to new design shops hoping to "seed" the market and sell more place and route suites. However, AVNT's stock might actually rally as 1)SNPS might be forced to buy AVNT to compete and 2) the perception of CDN going to battle another competitor. IMOO.
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