Three months ago, Synopsys claimed to have $56 million in physical synthesis bookings, Cadence claimed $110 million, and Magma claimed $80 million in bookings. Something seemed odd here. I had done a physical synthesis tape-out census three months prior, and Synopsys had 65 vs. Cadence's seven vs. Magma's three tape-outs. Synopsys was winning with a 10x to 20x lead over Cadence and Magma-yet Synopsys bookings were roughly half Cadence's and Magma's bookings. Huh?

And then I remembered why I did the tape-out census in the first place. Big companies like Cadence have many revenue and expense streams. They can manipulate accounting to show anything. But what about Magma's bookings?

Unfortunately for Rajeev Madhavan, the CEO of Magma, there's no way to play such games in an S-1. Since its founding in April '97 to Dec 2000, Magma has burned through $87 million for just $8.4 million in revenues. It's no wonder Magma laid off 20 percent of it workforce two months ago; it's beenburning cash like a dot-com! Rajeev's gone through three major and nine smaller rounds of financing. And those supposed $80 million in bookings Rajeev has? In his S-1, it's really just $6.9 million deferred revenue. Oops. Ouch.

Magma's tools are hurting, too. From what Gary Smith of Gartner Dataquest and I have heard from customers, Blast Fusion can only handle blocks, not full designs. Magma's struggling with synthesis and Gary says he's heard that Blast Fusion doesn't work on designs over 200 MHz. Ouch, again.

Rumor is that Magma's been trying to get itself bought out by one of the Big Four EDA vendors. Cadence, Synopsys and Avanti are all rumored to have said no right off, and Mentor's rumored to have said no twice. This has left Magma starved for cash, hence this desperate IPO. "This seems like a premature IPO," said Jessica Kourakos of Goldman Sachs. "Magma has been trying to sell themselves for some time now to no avail."

"There's no question that Magma needs the money given their $3 million a month burn rate and lack of revenues," said Jay Vleeschhouser of Merrill Lynch. "What can I say? Magma has an appetite for cash."

"At the end of the day, it's tapeouts and follow-on customer orders that count," concluded Jessica. And you know what? She's right.

John Cooley runs the E-mail Synopsys Users Group (ESNUG), is a Contract Asic Designer and loves hearing from you at jcooley@world.std.com or (508) 429-4357.