The other one stated that Apache had been named as Deloitte LLP's prestigious Technology Fast 500 recipients, one of the 500 fastest growing technology, media, telecommunications, life science and clean technology companies in North America. Rankings are based on percentage of fiscal year revenue growth from 2004 - 2008.

If one needed further confirmation that the company was in sound financial territory, just over six weeks before, Apache acquired Sequence and strengthened its position in the power and noise analysis market. All this got me thinking about the future possibilities of the company.

The main benefit for a company to be part of the Technology Fast 500 list is, aside for the short lived market exposure made even shorter by the poor coverage the news received, to get the attention of the financial markets to either receive additional investments with desirable terms, or to prepare an initial public offering (IPO) of its stock.

Apache does not seem to be looking for external investments, and its chances for an IPO, at least in the US markets are practically nonexistent.

The reason for the latter conclusion is the state of the EDA industry. Not to reiterate the obvious, the EDA industry has three large companies, a few mid-size companies, and a lot of small companies. The three large companies dominate practically all of the market segments served by our industry, while, at the same time, due to the consolidation happening in the semiconductor industry, the number of large customers is diminishing.

The result is that mid-size companies, like Apache, are finding it hard to justify the returns required for a successful IPO. None of the mid-size companies, like Springsoft, EVE, Denali, and Apache, just to name a few, can ever expect to go above the $500 million revenue, unless Cadence, Mentor, and Synopsys, suffer a collapse of unprecedented proportion.

Cadence, a company that has suffered significant financial negative adjustments, is still either the second or third largest EDA company, and the distance between the third and fourth largest EDA company is very near the $500 million mark.

It was traditional in our industry for small successful companies to be acquired by one of the big three, but this event is more likely for small companies whose price is less than $100 million.

Mid-size EDA companies have two choices: stay a "lifestyle company" or find capital outside the U.S.

Novas, was acquired by Springsoft, a Taiwanese company. And EVE, another very successful mid-size company, is based in Europe and has European financing. The financial markets are global, work around the clock, and it does not really matter where the money is coming from (as long as the source is legitimate).

Lifestyle companies are those whose founders, and Apache would fit this description, chose to form a company to pursue work they liked, are good at, and enjoy doing it. Denali is another classical example of lifestyle company.

So good luck, Apache. As Andy Grove of Intel used to say, high percentage growth is much more difficult as revenues increase. Going from one million to two is a 100 percent growth, while going from 10 million to 11 is only 10 percent.

Gabe Moretti runs his GABEonEDA site.