MCAD Industry View – A May 2009 Update






Commentary:

MCAD Industry View – A May 2009 Update


by Dr. Russ Henke and Dr. Jack Horgan
Henke Associates


This May 2009 issue of the MCAD Industry Commentary recounts the financial performances of a selected group-of-six MCAD/PLM vendors for the nominal FIRST QUARTER of 2009.

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 twenty-three 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.

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’ 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, as in this May 2009 issue of the MCAD Commentary.

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

Accordingly, this twenty-fifth MCAD Industry article in the sequel recounts the financial performances of the remaining group-of-six (G6) MCAD/PLM entities for the nominal first quarter of 2009.


Recent MCAD News Highlights


On May 11, 2009 ANSYS announced several high-performance computing (HPC) milestones using ANSYS 12.0. The new release is said to deliver performance gains that enable product development teams to increase the value of simulation by considering large, high-fidelity models in shorter turnaround times. Some of the HPC achievements in the recent release include optimized parallel computing performance on multi-core processors, expanded support for large simulations, scaling breakthroughs, and support for parallel file systems.

On May 05, 2009 Autodesk announced that it will offer five new industry-oriented software suites to help students learn core design and engineering skills. The suites include the 2010 versions of 18 industry-leading Autodesk products including Autodesk Education Suite for Mechanical Engineering 2010.

On May 19, 2009 Dassault Systèmes (DS) announced the availability of Abaqus 6.9, its unified finite element analysis (FEA) product suite from SIMULIA. This release is said to deliver new capabilities for fracture and failure, high-performance computing, and noise and vibration, as well as improvements in modeling, meshing, contact, materials, and multiphysics. Users of Abaqus 6.9 can consolidate their nonlinear and linear analysis processes within a unified FEA environment.

On April 29, 2009 the ESI GROUP announced the advent of its new logo along with a new tagline: “get it right™”. These moves are said to be in alignment with ESI Group’s strategy to enable End-to-End Virtual Prototyping. With this new logo design, ESI says it has moved towards a simple, fresh look to embody modernity and dynamism. (In the vendor-by-vendor section of this MCAD Commentary below, readers can compare the previous and the new logos).

On March 12, 2009 MSC.Software announced that its Board of Directors named Ashfaq A. Munshi interim Chief Executive Officer and President of the Company. These actions followed the resignations of William J. Weyand, Chairman and CEO and Glenn Wienkoop, President and COO, after four years. The Board of Directors also named current board members Donald Glickman and Robert A. Schriesheim to serve as non-executive co-chairmen, effective March 12. The Board of Directors also retained a national firm to conduct a search for a permanent CEO. Munshi has been a Director of MSC since July 2005. Earlier, he was a corporate vice president at Applied Materials, responsible for software and automation. Previously he was VP/GM of the Enterprise Business Unit at Silicon Graphics and prior to that he was director of development and marketing at Oracle.

On March 05, 2009 PTC announced that C. Richard Harrison had been named chairman of PTC’s board of directors. James Heppelmann was named president and chief operating officer, reporting to Mr. Harrison, who continues as chief executive officer. Noel Posternak, previously PTC’s chairman, remains a member of the Board of Directors and serves as PTC’s Lead Independent Director. All changes became effective March 4, 2009.

On May 26, 2009 Siemens PLM Software announced Solid Edge® software with Synchronous Technology 2. This release is the second version of Solid Edge to incorporate Siemens PLM Software’s synchronous technology, a history-free, feature-based modeling capability. Some details are included in the sequel in the vendor by vendor section of this May 2009 MCAD Commentary.


G6 MCAD Vendors' Financial Performances in Q1 2009


As a group, the G6 MCAD vendors generated combined revenues of “only” $1.26 billion, a significant decrease of almost 18% from the $1.53 billion reported in the first quarter of 2008, and a drop of over 13% from the $1.45 billion delivered in the just prior fourth quarter of 2008. On a year-over-year basis, as the worldwide economic slowdown deepened, Autodesk endured the largest percentage revenue decline at -29%. The rest suffered revenue drops in the low to mid teen percentage points. ANSYS was the only G6 firm to generate a year-over-year quarterly percentage increase (+6.2%) in dollar-denominated revenue. On a sequential quarterly basis, ESI Group was the only G6 MCAD vendor to see an increase in revenue. MSC.Software and PTC logged mid single digit percentage declines, while the others suffered drops between -13% and -20%. (Note: the Fourth Quarter of the MCAD calendar year is traditionally the strongest of the year revenue-wise).


Figure 1 below provides a bar graph showing the revenue trend for each of the covered vendors, for the periods mentioned in Table 1.


For the first quarter of 2009, Autodesk enjoyed the largest relative market share at 34%, Having overtaken Autodesk in Q4 2008, Dassault Systemes fell back to a close second at 32%, with PTC a distant third at 18%. Note that the Autodesk figure contains considerable revenue from outside the MCAD arena -- in AEC and Media/Entertainment. Also, all three of the leaders have some form of third party distribution that complicates comparisons. See Figure 2.


Table 2 reveals that the combined Q1 2009 earnings of the G6 MCAD vendors was a dismal $34 million, a giant 85% drop from the $223 million in the year ago quarter but an increase of nearly a factor of 10 from the even more dismal previous quarter. Autodesk had the dubious distinction of being the only G6 MCAD vendor to post a net loss for the first quarter of 2009, and Autodesk reported the largest year-over-year reversal from net gain to net loss. But all the G6 firms endured declining earnings relative to Q1 last year. Dassault Systemes showed the largest decline in absolute dollars, a year-over-year decline of 60%.

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