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Synopsys loss meets guidance as license revenue falls

Posted: 21 Feb 2005 ?? ?Print Version ?Bookmark and Share

Keywords:eda? verification platform?

EDA vendor Synopsys Inc. posted a GAAP loss of $14.6 million, or 10 cents per share, on sales of $241.3 million in its first 2005 fiscal quarter ended Jan. 31, ostensibly due to the company's shift from an upfront to time-based license revenue model.

Synopsys met the revised guidance targets it issued January 10, when it projected revenue of $237 million to $243 million with a 12 to 15 cent loss per share. In the year-ago quarter, Synopsys posted GAAP earnings of $32.1 million, or 21 cents per share, on sales of $285.3 million.

Aart de Geus, chairman and chief executive of Synopsys, said during a conference call with analysts and a brief interview with EE Times that the company was on track transitioning its business model to time-based licenses, which recognize revenue over the term of the license rather than when the product is shipped.

"Making the transition initially is painful, but as you go forward you feel better as customers deal with a provider having a solid business model," de Geus told EE Times. He pointed to the company's book-to-bill ratio of 1.8 to 1 during the quarter as a stronger indicator of Synopsys' performance rather than bottom-line earnings.

de Geus added that Synopsys was continuing to capture design wins with updated versions of its Galaxy platform, as designers continue gravitating toward 90 and 65nm designs. The company also saw strong acceptance of its Discovery verification platform, de Geus added.

Synopsys faces challenges, however. For the second 2005 fiscal quarter, the company projects revenue of $238 million to $248 million, with a GAAP loss of 8 to 12 cents per share, as the EDA industry faces an uneven recovery. Synopsys expects full 2005 fiscal year revenue of $940 million to $980 million, with a GAAP loss of 19 cents to 29 cents per share.

Also hanging over Synopsys is its bitter legal dispute with Magma Design Automation, which started last September when the company filed a patent suit against Magma, which later countersued Synopsys.

Synopsys did not address the Magma dispute during the conference call, but expanded the lawsuit against its rival earlier this week by filing an amended lawsuit accusing its rival of not only patent infringement but also fraud.

"We have obvious written proof of blatant copying and are driving toward an injunction of their (Magma's) products," de Geus told EE Times when asked about the dispute. "There's page after page of identical text on the patent."

In another matter, Synopsys said during the conference call it expects its acquisition of Nassda Corp., announced last December, to close before the end of the second 2005 fiscal quarter.

- Spencer Chin

EE Times

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