PARIS – Taking another step on its 'Device Ecosystems' strategy, Altium Ltd. announced its intention to relocate its global headquarters from Sydney, Australia, to Shanghai, China.
Altium said it plans to transfer its core software development activities, corporate office and executive management team to its existing office in Shanghai. China, the company stated, indeed represents "the best location and opportunity for the execution of its plan for the development of the market for tools, methodologies and systems that will help customers transform their businesses from product-based models to a service-based approach where web-based ecosystems enable direct relationships between device end-users and device manufacturers."
With this relocation, Altium said it intends to both contribute to, and benefit from, the next stage in the evolution of the Internet, the "Internet of Things".
At the time Altium acquired Morfik in Nov. 2010, the company explained that its objective was to help electronics designers expand their role from designing the electronics in devices to the larger role of designing and engineering web-based ‘device ecosystems’. These ecosystems will consist of the actual electronic devices, connected via the Internet, along with cloud-based software applications that run on this platform.
The headquarters move, the design tool provider noted, remains subject to the completion of various formalities and due diligence. The majority of the physical move is expected to take place between the later part of the fourth quarter of fiscal year 2010-2011 and the first quarter of fiscal year 2011-2012.
The first stage of the move consists in a reorganization of the Sydney office operations including a significant reduction in staff. Then, Altium stated, a team of core executive, management and senior development staff will be transferred to Shanghai. This team will combine with the group's existing Shanghai regional operations team to form the new global headquarters.
Eventually, Altium said it plans to expand its R&D team by recruiting
The company said it expects the move will have no material effect on profitability in the current financial year as cost savings are expected to be balanced by relocation costs and restructuring costs.
According to EDAC's latest report, for the third consecutive quarter the Asia-Pacific region has overtaken Europe and Japan as a consumer of EDA software and services and has benefited the most from sales in the fourth quarter of 2010. The Asia-Pacific region revenue represented $313.1 million in the fourth quarter of 2010, a 48.9 percent increase compared to the same quarter in 2009. The four-quarters moving average increased 39.6 percent.
Q4 2010 EDA revenue percentage by region Source: EDAC
It seems like a common sense approach to move to China Ė all the medium to big companies are doing it these days. The big problem for Alitum will be the risk in the move itself.
The reality is as you mentioned, their ASX filings for the last 5 years have shown a year on year loss of revenue and sales, coupled together with their weird/strange acquisition of Morfik which is a totally orthogonal piece of web technology that has no relation to EDA or CAD, the issues with protecting IP in the Chinese workforce, convincing people that have a comfortable living in Australia to pack-up and head-off to China, one canít help but conclude Altium is either circling the drain or is gearing up for some kind of fantastic end-game.
Either way it should make for some interesting times ahead.
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