WILSONVILLE, Ore.--More good news for the electronic design automation industry, which is trying to rally from a couple of slow growth years. Mentor Graphics Corp. here says it expects a 15% increase in revenues to about $680 million in 2001 from $590 million in 2000.
The design automation supplier also said it anticipates revenues of about $156 million in the first quarter of 2001, which is lower than $181.7 million in Q4 of 2000 but 22% higher than $128.1 million the first quarter of last year.
"Although the electronics industry may be slowing, the EDA industry tends to be counter-cyclical to the semiconductor industry and its capital equipment suppliers," said Gregory K. Hinckley, president and chief operating officer at Mentor Graphics. "As an illustration, in 1996, the last year of a severe downturn for the semiconductor industry, EDA had a growth year. We see near term strength in our business for the first half of the year compared to the guidance provided last quarter."
On Wednesday, Mentor posted a net income of $23.7 million on revenues of $181.7 million in the fourth quarter compared to revenues of $155.0 million and a net income of $5.0 million in the period a year ago.
Recent market statistics have indicated that the electronic design automation segment is pulling out of a recent slump. In January, a survey by the EDA Consortium's Market Statistics Services showed design automation revenues growing 12% to $920 million in the third quarter of 2000 form Q3 in 1999 (see Jan. 9 story). The consortium said the posting was the second consecutive quarter of growth following three consecutive quarters of slowing revenues.
Last week, Cadence Design Systems Inc. of San Jose beat analyst expectations, posting fourth-quarter revenues of $391 million and a net income of $63.4 million, but the company was downgraded by Credit Suisse First Boston analyst Erach Desai (see Jan. 26 story).
Late last year, Desai predicted a softening in the EDA industry in 2001, which angered many EDA vendors and analysts. Desai said he was concerned about market weakness, but also greater-than-expected use of flexible access model (FAM) licenses vs. subscription models. The FAM licenses front-loaded revenues in previous years, meaning revenues were inflated in 1998 and 1999.