PM
You're analysis makes a great deal of sense. Although I personally would like to see CDN do it (because I think having an end-toend solution will only help to get these companies to innovate on outer fringes in the long run) I doubt they'll do it.
Now looking at your analysis, here's my feedback:
1. CDN already owns 5%: I also see this as saying conversely, that CDN even if they were to acquire all of AMBIT, they do not necessarily need to roll it in/consolidate it. In other words, they could still leave it independant and try to IPO it, if the market permits. Then their returns will justify the investment. And if the market doesn't permit an IPO, they always can fall back on rolling it in.
2. The reasons you state (A. R&D charge B. EPS C. spin Wall Street) are exactly why CDN would do it.
3. What else does CDN get: You stated some important points, but you left out the most important one. CDN gets the comfort of knowing that AMBIT will not be acquired by someone else (MENT, AVNT, etc). This in itself, is incredible value for a couple hundred million.
Finally, a note on the "end to end story". There are two vectors here, at least from what I've seen in Japan, where the bulk of the world's silicon is designed.
Vector 1. Silicon companies DO NOT want one company to domintae. in other words conquer and divide. In the long term, it keeps any one company from getting too powerful.
Vector 2. Silicon companies DO WANT one company to dominate. This will in turn create savings for them (in the short term) since they can pay one company and filter out the redundant overlap they were forced to buy when getting pieces and chunks of technology and service from different companies. It also holds ONE COMPANY accountable for their success. All too often, EDA vendors have been able to blame the customer's lack of success on "because you used XYZ companies tools with ours, which we can't guarantee" type of excuses.
The question is, will customers opt for long term goals of avoiding a "monopoly" or will they see a short term monopoly as actually bringing them savings, while at the same time sprouting a new plethora of start ups trying to add value to what has now become a "platform". And do customers have the energy and money to be looking at a long term situation? Judging from the economy, especailly at Japanese Semis, they are more concerned with saving a buck today.
And now that CDN and others are trying to transition to a more "Integration & Services" model, their customers are no longer just Silicon companies. Their customers are gradually moving towards being the large electronics product companies. And often, these guys want silicon models in aggressive TIME TO MARKET cycles, not a headache about whose synthesis to use, whose place and route to use, and so on....
IMHO |
