February 16, 2004
Potential UGS PLM Solutions Sale In The Air?
Please note that contributed articles, blog entries, and comments posted on MCADcafe.com are the views and opinion of the author and do not necessarily represent the views and opinions of the management and staff of Internet Business Systems and its subsidiary web-sites.
| by Jeff Rowe - Contributing Editor
Each MCAD Weekly Review delivers to its readers news concerning the latest developments in the MCAD industry, MCAD product and company news, featured downloads, customer wins, and coming events, along with a selection of other articles that we feel you might find interesting. Brought to you by MCADCafe.com. If we miss a story or subject that you feel deserves to be included, or you just want to suggest a future topic, please contact us! Questions? Feedback? Click here. Thank you!
Potential UGS PLM Solutions Sale In The Air?
Amid continuing rumors and wild speculation, on February 9, Wei Gu of the Reuters news service reported that EDS. said it was exploring "all options," including a sale of its software subsidiary, to raise much-needed capital as its bonds were at risk of being downgraded to junk status.
A Financial Times story said EDS Chief Executive Michael Jordan valued the business at 1.5 times sales, or about $1.2 billion. However, Jeff Baum, director of investor relations, said the company would not accept an offer for less than two times 2003 sales, or $1.8 billion.
EDS said in October 2003 that it planned to complete an initial public offering (IPO) or a sale of a minority stake of its UGS PLM Solutions unit, a software unit that has outperformed its main outsourcing business, in the first half of this year. Things have been looking up for UGS' PLM business - sales rose to $894 million in 2003 from $879 million in 2002.But, after posting a deep quarterly loss and forecasting earnings that were only half of analysts' estimates for 2004, EDS said it will not rule out the chance of selling the whole subsidiary, which the company said could be worth about $1.8 billion.
"EDS wants all its money now," said Francis Gaskins, editor of IPODesktop, a Web site that tracks IPOs. "They may be selling the unit to a leverage buyout firm, which in turn will do an IPO." If EDS decides to go through a public offering or a private placement, it might only be able to sell a portion of the business initially, Gaskins said. Investors are unlikely to embrace the IPO because cash-strapped EDS could not afford to fund its future growth, he said.
Also on February 9, EDS issued the following brief statement regarding its UGS PLM Solutions subsidiary:
EDS has seen significant interest from several parties regarding UGS PLM Solutions.
The company is considering the private sale of up to 100% of its UGS PLM Solutions subsidiary, as well as the sale of a minority stake in the unit through an initial public offering as indicated in its October 13, 2003 press release.
EDS expects the valuation for a private sale of a majority stake in UGS PLM Solutions would exceed two times the unit's 2003 revenues of approximately $900 million.
The EDS statement is as interesting for what it doesn't say as for what relatively little it does say (and it doesn't say all that much). Whatever happens with this situation, it's just further proof of the volatility and possible further MCAD vendor consolidation (especially if UGS PLM is purchased by another CAD company, which seems pretty unlikely). I've thought for some time that a company like SAP, Microsoft, Oracle, even Autodesk might acquire PTC, but with UGS PLM on the block, only makes a big CAD acquisition more intriguing. In this latest round of acquisition mania, it probably makes the most sense, as well as having the greatest probability for success for SAP to seriously
look at purchasing UGS PLM. I base this opinion on SAP's current cash position, aggressiveness in the markets in which it serves, and the magnitude and "top-drawer" nature of the customers it services. Whatever happens, I wouldn't expect this acquisition to drag out for many months or years. EDS needs the cash that a sale would bring and probably will be open to entertaining several different options from a host of possible suitors. I'm hoping, too, that whomever ends up with the UGS PLM NX product line continues to develop and support this excellent product line, as well as serve the best interests of its user community.
Dreamy Partnership For Dassault and Boeing?
Dassault Systemes and Boeing Company are accelerating development of Dassault Systemes' integrated, version 5 Product Lifecycle Management (V5 PLM) platform. The V5 PLM products will enable Boeing and its partners to implement the digital tools and processes necessary to meet the challenges of the technologically advanced 7E7 - The Dreamliner.
Boeing and Dassault Systemes are creating a virtual development workspace known as the 7E7 Global Collaboration Environment (GCE). In this virtual environment, Boeing will design, build and test every aspect of the 7E7 airplane and its manufacturing processes digitally before production begins using the full suite of Dassault Systemes' PLM software solutions - CATIA, DELMIA, ENOVIA, and SMARTEAM. Together, these products will provide a distributed, worldwide collaborative workspace that integrates all 7E7 program partners into a single community. In addition, Dassault Systemes PLM Practices will ensure consistent development methodologies across the GCE.
"Boeing and Dassault Systemes employees are working together daily to define and develop the software and business processes that will become the 7E7 Global Collaboration Environment," said Frank Statkus, vice president 7E7 Advanced Technology, Boeing. "This environment will enable our company to coordinate the development efforts of its virtual enterprise, business partners and suppliers around the world."
The 7E7 will be the most advanced and efficient commercial airplane in its class and will set new standards for environmental responsibility and passenger comfort. To achieve this goal, Dassault Systemes, its CAA V5 (Component Application Architecture Version 5 is Dassault Systemes' open development platform) partners, and Boeing are extending the V5 PLM suite in order to dramatically transform the way Boeing designs, simulates, assembles and manufactures the 7E7.
"The 7E7 airplane we are offering our customers is the first airplane of the second century of flight. It will offer airlines improved operating economics and give passengers a better flying experience," said Statkus. "This requires a new business model for Boeing and its partners, a business model based on a global, virtual work environment that operates 24 hours a day, year round. Our new business model is designed to improve every aspect of the product life cycle - design and manufacturing, the ownership experience, and the flying experience. Dassault Systemes is the partner we've selected to help us create and deploy the Global Collaboration Environment."
"The 7E7 project represents a gigantic step forward for Dassault Systemes," said Bernard Charles, president and CEO, Dassault Systemes. "Boeing's adoption of the entire V5 PLM portfolio to develop this remarkable aircraft will help Boeing redefine the airplane manufacturing business and will demonstrate to corporations around the world how PLM transforms product development and enables new levels of innovation and end-to-end productivity."
While Dassault has thousands of CATIA customers around the world, by its two largest customers in the US are DaimlerChrysler Boeing. This is an interesting follow-on to a story that got a lot of notoriety about a decade ago when Boeing designed the lion's share of the 777 aircraft with CATIA in a virtually paperless environment (or at least less paper than used in previous Boeing aircraft design projects). With the experience that Boeing and Dassault have had over the past 10+ years, I'll be anxious to see how much time can be shaved off the development of the 7E7 versus the 777.
PTC Expands In Global Aerospace and Defense Markets
PTC says it is expanding its presence in the global aerospace and defense industry with significant sales and implementations to system integrators in the aircraft, defense electronics, missiles and space, shipbuilding, and armored ground vehicles sectors and their respective supply chains. PTC also says it is achieving significant penetration into government sectors, including defense departments, program offices, and national laboratories.
PTC says it now has an installed base of approximately 300 aerospace and defense (A&D) customers based on a suite of solutions that specifically meets the needs of that market. New wins and follow-on commitments have recently come from Boeing, Raytheon, Northrop Grumman, Goodrich, Smiths, Harris, Embraer, GKN Aerospace, China State Shipbuilding Co., and the China Aviation Industry Corp. In the government sectors, PTC has received new commitments from NASA and the US Department of Energy's National Nuclear Security Administration. PTC says that nine of the top 10 A&D companies worldwide are users of PTC's products.
"Aerospace and Defense is a very important market for PTC," says Jim Heppelmann, EVP and chief product officer at PTC. "We recognize the transformation that is occurring in the industry today and are aggressively committed to providing responsive solutions with our core product set, industry-specific solution components, and the extensive intellectual property we have developed after serving numerous A&D customers."
PTC says it is developing its PLM solution suite by recognizing the important differentiators that make product development in A&D unique, including the importance of programs and program information management, spiral development, focus on lifecycle cost, distribution of intellectual property, and the notion that lives are at stake with highly complex products when they fail or sometimes when they are successful.
"We stay on top of the key business drivers that are currently causing change throughout the A&D industry," says Berry Gibson, director for Federal, Aerospace and Defense Product and Market Strategy at PTC. "We see significant opportunities for product development solutions to address issues such as "defense transformation", increasing cost reduction and asset management pressures, increasing product complexity, increasing value chain complexity, globalization, and new directives issued by the Department of Defense. Our industry-focused solution set is bringing many A&D companies to adopt PTC solutions."
In response to these business drivers and the unique aspects of product development in A&D, PTC has fine-tuned its solutions across five major product lifecycle management (PLM) areas including: Configuration Management, Integrated Program information Management and Program Execution, Modeling and Simulation, Advanced Collaboration Infrastructures, and Digital Product Definition.
PTC believes that the number-one critical need across the federal, aerospace, and defense (FAD) market today is for a Configuration Management System, that is scalable over a complex supply chain and enables rigorous product structure management, heterogeneous CAD data management, change management, deliverables management, alternates and substitutes functionality, parts re-use, and management of the as-built/as-maintained bill-of-material. PTC has recently introduced its first industry-specific solution for the federal, aerospace and defense market called the "FAD Template", built on Windchill PDMLink and designed to address the unique configuration management needs of A&D companies.
It's interesting (and probably smart) that PTC has chosen the huge aerospace and defense markets to actively go after. I'm not aware of any of the other major CAD vendors that have made a conscious and concerted effort to pursue this market on a worldwide basis. While PTC has had some successes in another huge market segment, automotive, it is not the majority MCAD package at any of the top five automakers, so this calculated foray into the aerospace and defense spaces might portend better days to come.
Jeffrey Rowe is the editor and publisher of MCADCafé and MCAD Weekly Review. He can be reached at
Product and Company News
You can find the full MCADCafe event calendar here
To read more news, click here
-- Jeff Rowe, MCADCafe.com Contributing Editor.