In a surprise action last Friday, Judge Kevin Murphy granted the motion by Avanti to dismiss the criminal case based on claims that the grand jury transcripts were incomplete. At issue were the district attorney's instructions to court reporters to not record certain communications to the jurors. Julius Finkelstein, deputy district attorney for Santa Clara County, is seeking an appeal of the ruling and has suggested he might reconvene a grand jury to seek new indictments.

Meanwhile, the civil case that Cadence Design Systems Inc. brought against Avanti four years ago is still pending, though legal wrangling continues to delay it. In addition, Avanti faces new competition from IC physical design startups, such as Magma Design Automation Inc. and Monterey Design Systems Inc., as well as Synopsys Inc., whose "physical synthesis" offerings are delving deeper into IC layout. And Avanti has lost a number of high-level executives to other EDA companies, most recently Thomas Beckley, who left as head of Avanti's systems division to lead analog startup Neo Linear Inc.

Though Avanti's legal issues are on the back burner, the company still has problems, said Jennifer Smith, analyst at Dain Rausher Wessels. "We are going to focus less on legal problems and look more closely at Avanti's market position," said Smith. "They are fending off new competition from Synopsys and a host of other companies promoting new methodologies."

Bill Alexander, vice president of marketing at Monterey Design Systems, is one of the recent Avanti defections to other EDA companies. Alexander believes his new company's Dolphin product, which promises a complete IC physical design solution in one tool, has an architecturally superior approach.

"Avanti does have good technology that performs very useful analysis and implementation, but the order in which the tools have to be run is not clear and is very dependent on the design styles," he said. "Dolphin's approach performs optimizations across all design parameters simultaneously so that designs are completed in one pass."

Another recent Avanti executive defection is Vic Kulkarni, who left as head of Avanti's Silicon Business Unit in January to become senior vice president of marketing at Sequence Design, the new name for Frequency Technology.

Avanti's first-quarter 2000 financial report shows strong results for the company, with quarterly revenue of $85.2 million, a 19 percent rise over the same quarter in 1999. The company's stock price, however, has been depressed for several years because of the legal troubles. Avanti stock briefly jumped 40 percent on news of the April 28 ruling but has since given up nearly all of that gain, closing at 13 5/8 on May 3.

— Additional reporting by Michael Santarini