MANHASSET, N.Y. Three weeks after revising its fiscal fourth quarter guidance downward, Magma Design Automation Inc. Thursday (April 28) reported a net loss for the quarter that was even larger than expected.
Magma posted a net loss of $5.6 million, or 16 cents per share on sales of $35.7 million in its fiscal 2005 fourth quarter. By contrast, the company reported net earnings of $4.2 million, or 10 cents per share on sales of $34 million in the year-ago quarter.
Magma (Santa Clara, Calif.) lowered its quarterly guidance April 7
, blaming order processing issues for a projected 10-to-14-cents per share GAAP loss. The EDA vendor's 16-cents per share loss fell short of the revised guidance and far short of the original 0-to-4 cents per share profit forecast in January
Magma fared no better in its 2005 fiscal year results. The company posted a net loss of $8.6 million, or 25 cents per share on sales of $145.9 million, compared to earnings of $11.5 million, or 29 cents per share on sales of $113.7 million a year earlier.
During the company's earnings call Thursday (April 28), Magma executives emphasized that fourth quarter bookings were a new company record and that the $145.9 revenue for 2005 was the highest the company has recorded for any year.
Roy Jewell, president and COO, said Magma continued its "long trend of getting at least 10 new customers each quarter," during the fourth quarter.
Magma remains embroiled in a bitter patent infringement dispute with Synopsys Inc. Synopsys recently filed a declaration with the U.S. District Court for Northern California in which Magma co-founder Lukas van Ginneken
said he conceived of some technology underlying Magma products while employed at Synopsys.
Rajeev Madhavan, Magma chairman and CEO, said during the earnings call that lawyers for Magma and Synopsys took a deposition from van Ginneken April 26-27. "Synopsys lawyers are currently taking the position that the entire transcript of the deposition should be kept confidential. I personally do not understand how they could put a declaration in the public domain two weeks ago and then object to doing the same with more of Dr. van Ginneken's words. But that's for the court to sort out, and I am confident that it will."
A spokeswoman for Synopsys said Friday (April 29) that Synopsys lawyers have asked the deposition be temporarily designated as confidential to ensure that intellectual property that may be contained within it not be compromised. The spokeswoman also said that it was a neutral party, not an employee of Synopsys, who posted van Ginneken's declaration, which is a public court filing, on an Internet site April 12.
Madhavan said he could not comment further on the deposition. "I will say again that Magma products rely on technology and techniques developed by Magma's talented development team during their employment at Magma."
Madhavan added, "Our position is that no Magma products, alone or in combination, practice any claims of the three patents that are the subjects of this litigation."
Magma CFO Gregory Walker said legal expenses associated with the Synopys litigation were $2.2 million for the fourth quarter and that the company expects litigation expenses to be $8.5 to $9 million for fiscal 2006. Litigation and increased spending associated with Sarbanes-Oxley legislation were the major reasons that Magma's non-adjusted operating expenses increased to $33.9 million during the fourth quarter, up 40 percent from $24.2 million for the fiscal fourth quarter of 2004, Walker said.
For the first 2006 fiscal quarter ending July, Magma expects revenue of $35 to $39 million, with a net loss of 9 to 13 cents per share.
Jewell said that Cadence Design Systems Inc.'s first quarter earnings announcement
April 27 seems to "confirm that Magma has quickly grown to become the dominant vendor in deep submicron digital design and represents about one third of the overall digital market."