MCAD Industry View — A March 2006 Update

Dr. Russ Henke Dr. Jack Horgan Commentary

MCAD Industry View — A March 2006 Update

by Drs. Russ Henke & Jack Horgan
Henke Associates

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

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.

Company Last
Last QTR
ANSYS 44 39 12.0% 39 12.4%
Autodesk 417 377 10.5% 356 17.0%
Dassault (€) 304 214 42.3% 240 26.8%
Dassault ($) 362 261 38.8% 312 16.1%
ESI Group (€) 12.1 11.9 1.7% 11.5 5.2%
ESI Group ($) 14.8 15.0 -1.5% 14.0 5.2%
Moldflow 16.9 15.3 10.6% 16.3 3.9%
PTC 193 195 -1.3% 169 13.8%
UGS PLM 327 290 12.6% 283 15.4%
Total 1,373 1.193 15.1% 1,190 15.5%
Table 1 - Quarterly Revenues of G7 MCAD Vendors (US$ millions)

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Review Article
  • October 09, 2008
    Reviewed by 'Brian'
    I really feel the liberal Political points of views are unnecessary for this type of new letter. I have commented on this before to the editor and he said there was several comments of the same concern and that something would be done about it. It seemed to calm down for a while and now it’s back. This seems to be from the very liberal side (Which seem to thrive in big cities i.e.:S.F. and our educational institutions) which in fact is the minority of this country by far. It’s just that they take polls that always seem to back up there view and flash them all over and then when it comes time for elections the polls are blown out of the water . Bottom line there is no place for this one sided view in this type of publication. Again I will see if things are rectified and if not I will campaign to all the people in this type of work to boycott this otherwise great CAD News tool. It's easy to grap liberal ammo from our large liberal media.


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  • October 09, 2008
    Reviewed by 'Kurt'
    An informative article until the Geopolitical & Economic Factors heading. I agree with the two posters above- this is an entirely different topic that belongs elsewhere.

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  • October 09, 2008
    Reviewed by 'Jay'
    I fail to understand why the authors feel so compelled to include their clearly biased and subjective rants against the Bush administration at the end of what otherwise appears to be an informative well-researched article. By injecting that into the article one has to wonder whether they harbor other biases that effect their reporting. More importantly, there is no relevance to their “Geopolitical & Economic Factors” to a report on the MCAD industry. No doubt, they would argue these topics must be reported on to offer a well-rounded review of the industry within the context of the economy in which it operates. However, this is not reporting, it is nothing more than a string of adjectives incorporated into one-sided rant that clearly exposes the author’s biases.

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