MCAD Industry View A March 2006 Update
by Drs. Russ Henke & Jack Horgan
In the first MCAD Industry Commentary published May 2003 in MCADCafé.com, then-recent yearly and quarterly financial performances of a selected group of public Mechanical Computer Aided Design (MCAD) companies were analyzed and compared. Expectations of future financial performances of these same MCAD entities were documented. The May 2003 MCAD Commentary was followed by ten quarterly updates in MCADCafé.com, one for each subsequent calendar quarter. URL's on all past articles are available. The entities covered were ANSYS, Autodesk, Dassault Systèmes, UGS PLM, ESI Group, Moldflow, MSC.Software, PTC and Tecnomatix.
Due to the acquisition of Tecnomatix by UGS that closed April 1, 2005, Tecnomatix will no longer be covered here as a separate entity. While MSC.Software will be discussed in the article below, its financials will be omitted from the vendor comparisons because of MSC.Software's ongoing financial restatement issues.
Accordingly, the current article in the sequel recounts the financial performances of the remaining group-of-seven (G7) MCAD/PLM entities for the nominal fourth quarter of 2005.
Recent MCAD & PLM News Highlights
On March 2, 2005 Dassault Systèmes announced a merger agreement pursuant to acquire MatrixOne for $7.25 per share in cash, representing a total transaction value of approximately $408 million. The acquisition should be completed by the end of the second quarter of 2006, subject to customary closing conditions, including approvals by MatrixOne's shareholders and regulatory authorities. MatrixOne has 488 employees and 26 offices in North America, Europe and Asia Pacific. For its most recent fiscal year ended July 2, 2005, MatrixOne reported total revenues of $124.1 million. Cash and cash equivalents totaled $98.6 million at December 31, 2005. The revenue contribution from MatrixOne should give Dassault the clear lead in terms of mechanical PLM revenue. MatrixOne claims over 850 customers.
Authors' Comments on this acquisition: Dassault purchased mid-range mechanical CAD vendor SolidWorks in 1997 for around $310 million. At the time, SolidWorks had annualized revenues around $25 million. Since then, SolidWorks has operated with a high degree of independence. It uses a different sales channel and there is little in the way of product integration with CATIA, the Dassault's high-end CAD system. Dassault's PDM business (Enovia and Smarteam) generated ~$122 million in 2005. MatrixOne has a direct sales model versus Dassault's reliance on IBM (IBM business partners at the high end and VARs at the low end). By customer segment, MatrixOne revenue breakdown is: High Tech 49%, Automotive 23%, Aerospace/defense 12%, Industrial 10% and Consumer Products 6%. Dassault sees MatrixOne's strengths in semiconductor, medical, apparel and E&E as complementary. In attempting to explain how three distinct PDM/CPC product lines Enovia, Smarteam and MatrixOne fit together, Dassault has a chart something like the one shown below. The chart graphs two types of complexities.
Collaborative Business Process
Document x Workflow x User
Document x Workflow x User
It remains to be seen how the various products and the people will work together over time.
On February 16, 2006 ANSYS announced a definitive agreement to acquire Fluent, Inc., a global provider of computer-aided engineering simulation software, in a stock and cash transaction valued at approximately $565 million. In 2005 Fluent had a revenue growth rate of 16% and total revenue of $129 million (unaudited). Fluent is said to employ 750 people in 15 offices worldwide.
On February 7, 2006 Autodesk announced it has signed a definitive agreement to acquire Constructware for $46 million in cash, subject to a working capital adjustment. Constructware, privately held and based in Alpharetta, Georgia, provides on-demand communication and collaboration solutions that streamline design, construction and facility project management. The deal is expected to close in March 2006.
On February 1, 2006 Dassault Systèmes announced the appointment of Patrick Romich as CEO of its ENOVIA brand. Mr. Romich most recently served as an Entrepreneur in Residence with Warburg Pincus, LLC, where he was involved in sourcing deals in the engineering content space for the firm. He has served as chief executive officer for Synchronicity Software, Inc. and as CEO for IQXPERT. Since ENOVIA's inception in 1998, the role of CEO has been filled by Joel Lemke, who has also been General Manager for Dassault's PLM Americas organization since 2003. The appointment of Mr. Romich, will allow Mr. Lemke to focus on his executive role of building the PLM Americas team.
On January 17, 2006 Autodesk announced that Carl Bass, the company's chief operating officer, had been named president and chief executive officer, effective May 1, 2006. Bass also was immediately appointed to the company's expanded Board of Directors. Carol Bartz, who served as CEO since April 1992, will become the company's first Executive Chairman of the Board. Carl has been with Autodesk 10 years, most recently as COO. Before serving as COO, he was senior executive vice president of the Autodesk Design Solutions Group. Carl also served as chief strategy officer, chief technology officer and executive vice president of emerging business at Autodesk.
MCAD Vendors' Financial Performances in Q4 2005
As a group, the G7 MCAD vendors generated combined revenues of $1.37 billion in the fourth quarter of 2005, an impressive 15.5% increase over the $1.2 billion in the fourth quarter of 2004 and plus 15.1% over the $1.2 billion in the sequential third quarter of 2005. See Table 1.
|ESI Group (€)||12.1||11.9||1.7%||11.5||5.2%|
|ESI Group ($)||14.8||15.0||-1.5%||14.0||5.2%|