MCAD/MCAE Industry View - A March 2011 Update


Commentary: MCAD/MCAE Industry View - A March 2011 Update


by Dr. Russ Henke
Henke Associates

Introduction:

This March 2011 issue of the MCAD/MCAE Industry Commentary recounts the financial performances of a selected group-of-five MCAD/PLM/MCAE vendors (G5) for the nominal Fourth Quarter of calendar 2010.

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) and Mechanical Computer Aided Engineering (MCAE) vendor companies were analyzed and compared. Expectations of future financial performances of these same entities were documented.

The May 2003 MCAD Commentary was followed by thirty (30) quarterly updates in MCADCafé.com, one for each subsequent calendar quarter. URL's on all past articles are available. The entities initially covered were ANSYS, Autodesk, Dassault Systèmes, UGS PLM, ESI Group, Moldflow, MSC.Software, PTC and Tecnomatix.

As a result of the acquisition of Tecnomatix by UGS that closed April 1, 2005, Tecnomatix was eliminated from coverage thereafter as a separate entity.

On May 7, 2007 UGS announced the close of its acquisition by Siemens AG effective May 4. Thereafter, the business went to market as UGS PLM Software (and later as Siemens PLM Software), a global division of the Siemens Automation and Drives (A&D) Group. Over the years UGS itself had bounced back and forth between being a public company and a private company under different ownerships. Regrettably, we have been able to gain very little insight into UGS' financial performance itself from public Siemens' corporate reports after the Siemens acquisition. Occasionally we will include Siemens PLM Software news items that bear on the industry as a whole.

Then on June 25, 2008 Autodesk completed its acquisition of Moldflow Corporation, so thereafter Moldflow was eliminated here from separate coverage.

On July 07, 2009 MSC.Software announced that it had entered into a definitive agreement with affiliates of Symphony Technology Group (STG) under which a company controlled by STG would acquire all of MSC's outstanding shares in a one-step cash merger transaction. This acquisition of MSC.Software by STG was finally consummated on October 14, 2009. No financial results for MSC.Software were published for Q3 2009, and none since. Unless and until such data are subsequently made available, MSC.Software has been dropped from financial reporting coverage herein, although occasionally MSC.Software news items that bear on the industry as a whole will be mentioned.

Henke Associates recognizes that some MCAD/PLM/MCAE vendors have expanded their offerings into the world of “multi-physics” by moving beyond pure MCAD into other disciplines, such as fluid dynamics and electronic analysis (e.g. ANSYS). This Commentary will also report on these new areas as appropriate. (The EDA WEEKLY article posted on EDACafe.com on July 19, 2010, entitled, “ANSYS turns 40!” dealt with ANSYS multi-physics, and it is available in the EDACafe.com EDA WEEKLY archives).

This thirty-second (32ND) MCAD/MCAE Industry article in the sequel recounts mainly the financial performances of the remaining group-of-five (G5) MCAD/PLM/MCAE entities for the nominal fourth quarter of calendar 2010:



The timing of the posting date of the MCAD/MCAE Commentary each quarter is driven by the release date of quarterly financials of the last G5 vendor reporting.
Again this quarter it was Autodesk, which released its Q4 2010 results on FEBRUARY 24, 2011, but this month did so just a few hours after ANSYS’ Q4 2010 release.

The following is divided into two (2) basic sections, the first of which discusses the “G5 financial results for the nominal Fourth Quarter of Calendar 2010,” and the second section covers “Recent MCAD/MCAE News Highlights.”


Enjoy!


G5 MCAD/MCAE Vendors' Financials in Q4 2010

Measured in $US except where indicated, Table 1 below reveals that the combined total revenue of the G5 was US$1610.9 million in Nominal Q4 2010, a very healthy 12.8% rise over the $1427.7 million total in the just prior Q3 2010, and a robust 16.3% above the total year-over-year figure of $1385.6 million for Q4 2009.

With such a healthy quarter to end the year, the G5’s average quarterly revenue for 2010 was $1431.8 million, a gaudy 13.9% better average than the $1257 million per quarter in 2009. “Gaudy” to be sure, but sadly not enough for 2010’s annual revenue total to reach or eclipse the revenue total in 2008, i.e. the revenue total for the year just before Bush 43’s second recession started sucking the life from the worldwide economy in December 2007.

But Q4 2010 almost made it happen -- another $210 million in additional revenue from the G5 in Q4 2010 is “all it would have taken.” For some of us MCAD aficionados, it would have been a nice additional feather to add to President Obama’s “Comeback Hat” [1].

As Table 1 reveals, both ANSYS and Autodesk made up for 9 months of relative revenue flatness, each with a proportionally huge Q4 2010 revenue result, achieving 2010 yearly revenue totals of $580.2 million and $1.952 billion, respectively. Dassault Systemes (DS) made the climb with increasing revenue each quarter toward a $2 billion+ revenue year, and PTC split the year in half, advancing in two “half-year steps” toward a billion dollar+ revenue year. Rounding out the G5, the ESI Group chimed in with a $100 million+ revenue total of its own for 2010.

So it will most likely still be another year (2011) before 2008 is matched or exceeded in terms of G5 total annual revenue. But already in early 2011, the steady U.S. economic recovery is threatened with upheavals in the Middle East, ballooning oil prices, and misguided U.S. right wing crusading for union busting, deficit reductions that no one wants, and a threatened U.S. Government shutdown [2].





1 Notice that these Table 1 columns calculate the percentage of one quarter over the other, as labeled, whereas in Table 2 below, the relevant columns provide the numerical dollar differences in earnings between two different quarters as labeled.

2 In Tables 1 and 2, the FX rates for Q4 10 & Q4 09 for ESI Group, were the same FX rates used for DS in Q3 10 & Q3 09.

Turning to earnings in Table 2 below, the same four vendors whose combined net earnings total was only $146.3 million in sequential Q3 2010, blossomed nearly +85% in Q4 2010 to an earnings total for Q4 2010 just under $231 million, with DS leading the profit charge but with the three others also providing healthy contributions.

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