By Russ Henke on 8/16/2008 6:16 AM

In the June 29, 2008 blog entry in this space, entitled, “Will the ‘Big 3’ EDA Vendors soon become the ‘Big 2’ ??”, we commented on the bid by Cadence to buy EDA rival Mentor Graphics. See http://cofes.com/Community/Blogs/tabid/272/EntryID/142/Default.aspxWell, it looks like the ‘Big 3’ will be around, at least for awhile.On August 15, 2008, Cadence finally grew tired of the effort and called off its $16 per share ($1.6 billion) bid to acquire Mentor.Shareholders immediately expressed their opinions of this news. Shares of Cadence surged 7% during the August 15 trading session to close at $7.64 a share, while shares of Mentor tanked, falling 26% to close at $10.33.From the June 29 blog entry, readers will recall that Mentor had immediately rebuffed Cadence’s original $16 a share offer. In any case, industry insiders say that since then, Cadence was having trouble obtaining reasonable funding terms for the more than $1.1 billion needed to do the deal, a task made more troublesome after Cadence lowered its 2008...

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By Russ Henke on 8/5/2008 7:34 AM

One in five German manufacturers pulling production out of China:On August 4, 2008, Germany's Der Spiegel reported that "China lost its status as the world's cheapest country for manufacturing some time ago." Now momentum is "shifting away from outsourcing to the Far East, with one in five Germany companies pulling production out of China."Chinese workers, they say, are getting too expensive. Many German companies cite "fast-climbing labor costs and pesky production quality problems" as reasons they are either "searching for countries with lower wages [or] returning production to Germany." Hans Röhm of the consulting firm Deloitte said that "the companies that are most likely to return to Germany are those that outsourced production out of cost considerations -- including the consumer goods industry and textiles, which both produce in mass quantities." However, "German manufacturers of high-quality goods are also looking at China with a more critical eye," according to Der Spiegel. "A dip in quality for these...

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By Russ Henke on 8/4/2008 4:59 AM

On August 1, 2007, the entire span of the Minneapolis Interstate 35-W bridge over the Mississippi River collapsed, with numerous fatalities and injuries, a disaster later reportedly traced to an original engineering design flaw in the gusset plates connecting the underpinning beams. (Over the months since, corrosion and rust have also been cited as possible culprits). Back then, the 35-W collapse was discussed in several blog entries in this space.The Missouri Department of Transportation recently released a report that raises further concerns: One out of every four bridges now in use in the United States is classified as “structurally deficient,” just as the I-35W bridge was classified before it failed. That’s about 152,000 bridges, and counting. Within the next 15 years almost half of the US bridges will exceed 50 years of age, beyond the life span for which they were designed. Even now, 20% are already over 50 years old. Fixing every US bridge flagged with structural issues would cost at least $140...

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By Russ Henke on 8/2/2008 7:33 AM

In the June 29, 2008 blog entry in this space, entitled, “Will the ‘Big 3’ EDA Vendors soon become the ‘Big 2’??”, it was parenthetically mentioned that MCAE vendor ANSYS was in the process of absorbing EDA vendor ANSOFT.On July 8, we reported that ANSYS had received SEC clearance for the ANSOFT acquisition on June 23, 2008, and that a special meeting of the ANSOFT stockholders to approve the transaction had been set for July 23, 2008.Well, the deal is done! On July 31, ANSYS announced that it had successfully completed the acquisition of ANSOFT in a series of mergers for approximately 12.2 million shares of ANSYS common stock, including 1.9 million shares pursuant to assumed stock options, and approximately $387 million in cash, plus expenses, using a combination of existing cash and proceeds from approximately $355 million of committed bank financing to fund the transaction.Dr. Zoltan Cendes, founder and Chief Technology Officer of ANSOFT, will become a Chief Technology Officer with ANSYS and member of the ANSYS...

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By Russ Henke on 7/8/2008 9:07 AM

In the June 29, 2008 blog entry in this space, entitled, “Will the ‘Big 3’ EDA Vendors soon become the ‘Big 2’??”, it was parenthetically mentioned that MCAE vendor ANSYS was in the process of absorbing EDA vendor ANSOFT.ANSYS and ANSOFT had agreed that ANSYS would acquire ANSOFT for a purchase price of approximately $832 million in a mix of cash and ANSYS common stock based on the 10-day trailing average closing price of ANSYS common stock prior to the original announcement of the pending transaction on March 31, 2008.ANSYS received SEC clearance for the ANSOFT acquisition on June 23, 2008. A special meeting of the ANSOFT stockholders to approve the transaction has been set for July 23, 2008.Meanwhile, on July 8, 2008, ANSYS announced that it has been listed on this year's Russell 1000(R) stock index. ANSYS was one of six companies in the technology sector just added to the Russell large-cap index."The Russell 1000 Index is one of a number of recent milestones that validate our long-term strategy and commitment...

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By Russ Henke on 6/29/2008 7:43 AM

Mergers & Acquisitions are hardly rare in the world of Computer Aided Engineering (CAE) or Computer Aided Design (CAD). Indeed, seldom does a quarter pass without one Electronic Design Automation (EDA) vendor buying another. The same is true in the Mechanical CAE and Mechanical CAD/PLM industries. Indeed, being acquired by one of the top three vendors in EDA or in MCAD is a favorite exit strategy for small start-ups that develop a specialized or breakthrough technology. This exit path is especially attractive as the IPO market for venture-backed companies dries up.While EDA companies usually buy smaller EDA companies, and MCAD companies likewise, it’s not unheard of for crossover to occur. For example, MCAE vendor ANSYS recently acquired EDA vendor ANSOFT.More unusual, however, is for one of the leading EDA or MCAD vendor companies to acquire one of the other members of their respective oligopolies.Such a possibility recently surfaced in the news, wherein CADENCE (San Jose, CA) is reportedly pursuing MENTOR GRAPHICS...

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By Russ Henke on 6/19/2008 5:12 PM

The latest the AP-Ipsos survey results are just in, measured in mid-June. And guess what! More Americans than ever say the country is going in the wrong direction! Seventy six percent (76%) now say the country is definitely on the wrong track. That's up from 71% in April and 66% near the end of 2007.Some 17% still (inexplicably) insist that the country is going in the right direction. That’s the lowest percentage of die-hards ever recorded by the survey.The overall level of US pessimism is the worst in almost 30 years, worse than Bush 43’s first recession, worse than Bush 41’s recession, and worse than Reagan’s economic dips. Consumer confidence alone is now the lowest it’s been in 28 years. Most blame the current rising food and gas prices, falling home values and unending war. Imagine that! Asked about Bush 43’s handling of the US economy, 72% said they disapproved."For the average American, everything's going wrong. I think there's a lot of reasons for households to be pessimistic," said Mark Zandi, chief economist...

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By Russ Henke on 6/8/2008 10:16 AM

Friday June 06, 2008 marked the latest low point in the steadily sinking US economy of Bush 43’s second recession, with a one-day triple dose of bad news. Ongoing unregulated speculation and still more Middle East tensions (e.g. an Israeli official threatened military action against Iran's nuclear installations) drove the price of a barrel of crude oil to a record level above $138, up 13% in just two days. On June 06 alone, crude-oil prices spiked $10.75, the largest one-day gain ever recorded. Regular gas, now at a record $4.00 per gallon average across the country, will surely and quickly follow the oil spike (CA regular is already at $4.40 per gallon). Ordinary US citizens are not the only ones being squeezed. Truckers and airlines are also suffering. Indeed, any businesses that use raw materials made from oil, like tires, toiletries, paper towels, bath tissues, plastic packaging, paint, mobile phones, light bulbs, cushions, mattresses, car seats, carpets, steering wheels, polyesters, computer screens, etc.,...

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By Russ Henke on 6/1/2008 10:23 AM

The most recent blog entry in this space dealt with Topic #4 from the following May 29 news list:   1. Scott McClellan’s new memoir about the Bush 43 White House   2. Bear Stearns disappearing into JP Morgan Chase   3. SPAM sales on the rise   4. Q1 GDP being revised up from 0.6% to 0.9%Today we’ll tackle Topic #2.On May 29, 2008, Bear Stearns and JPMorgan Chase announced that the stockholders of Bear Stearns, at a special May 29 meeting, approved the merger with JPMorgan Chase. Approximately 84% of shares voted in favor. The merger closed on May 30, 2008. Each outstanding share of Bear Stearns common stock was converted into 0.21753 shares of JPMorgan Chase common stock, and Bear Stearns became a subsidiary of JPMorgan Chase. Also, the NY Federal Reserve Bank and JPMorgan Chase agreed that they will complete the previously-announced sale of $30 billion of assets by subsidiaries of Bear Stearns and the related financing on or about June 26, 2008, a time period “to help ensure the smooth transfer of this large...

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By Russ Henke on 5/29/2008 5:01 PM

So many things to comment on today; too little time…  1. Scott McClellan’s new memoir about the Bush 43 White House  2. Bear Stearns disappearing into JP Morgan Chase  3. SPAM sales on the rise  4. Q1 GDP being revised up from 0.6% to 0.9%  5. …and many moreWe’ll leave most of these to another time soon, although #3 is immediately tempting, mostly due to Monty Python and to the fact that dinner time is near.No, today we’ll talk about #4.I just have one question: Do you feel luckier, now that the Q1 GDP was actually 0.3% higher in Q1 2008? Well, do ya?Not I !!. The number of US jobs lost in Q1 2008 remains at 240,000. There were still 7.6 million US people unemployed at the end of Q1, up from 6.8 million unemployed only a year earlier, and estimates still say US unemployment is gonna get worse. Oil & gas prices are still through the roof. Inflation is still too high. Consumer Confidence is still at a 16-year low. Sales of new US homes are still at their lowest level in 17 years. US housing prices still dropped...

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By Russ Henke on 5/27/2008 4:54 PM

On Tuesday May 27, 2008, the price per barrel of oil dropped from the mid-$130’s that it “achieved” last week, to end trading below $129. Hallelujah?Well, maybe not! Just as General Petraeus recently warned us all to keep the champagne in the back of the fridge when it comes to IRAQ, maybe likewise we’d better hold off on the “economic toasting” for awhile.Because the latest economic news is not good, my friends. While the price of oil did close down a few percentage points on May 27, US average gas prices hit another record high at almost $3.94 a gallon of regular, according to a survey of stations by the AAA and the Oil Price Information Service. Now, enterprising thieves have added puncturing gas tanks and gas lines to steal gasoline to their previous nefarious methods of either siphoning gas, or just driving off without paying after fill ups at gas stations.While the Dow ticked up a tad (+0.6%) on May 27, the Dow lost a startling 3.91% just last week — its worst showing since February 2008. Other indexes...

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By Russ Henke on 5/18/2008 4:48 PM

Here are a few more data points that have emerged since the last blog entry in this space:In 1993, the richest 1% of American families pocketed 14% of the nation’s income. By 2006, their slice had grown to 23%.In a new US corporate IT spending survey by ChangeWave Research in April 2008, 25% of the respondents said their company will spend less on software in coming months. This figure is 3 points higher than a study ChangeWave conducted in January and 11 points higher than one completed in October 2007, indicating a deepening trend.Consumer prices increased a hefty 0.6% in April 2008, the US Labor Department said on May 15, 2008, if you take out seasonal adjustments. Of course, if one does not eat or drive (i.e. ignoring price increases in food and gas), April consumer prices increased only 0.2%. During the last 12 months, overall consumer prices increased 3.9%. Food alone has risen 5.1%; gasoline has risen 20.7%.The government also reported that oil imported in April 2008 cost 67% more than oil imported a year...

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By Russ Henke on 5/3/2008 8:23 AM

Yesterday, May 2, 2008, the US Labor Department issued its monthly Jobs Report for April 2008. The Report estimates that “only” 20,000 more US net jobs were lost in the month. Hey, the recession is over, right?Not so fast!Lest we forget, April marked the fourth consecutive month of declining US jobs. During that 4-month period, 260,000 net jobs were lost –- an average of 65,000 jobs lost per month. Since it takes 127,000 new jobs every month just to stay even, that means the US has fallen behind some 192,000 jobs in each of the last four months, or 768,000 for the 4-month period.And as usual, April’s mix of jobs lost & gained was telling: 46,000 US manufacturing workers were laid off last month; 326,000 such positions have been lost over the last year. Construction lost 61,000 jobs. In April alone, that’s 107,000 more workers lost in these two key wealth-producing sectors where CAD/CAM and AEC must succeed.Then how did the US lose only 20,000 net jobs in April? Health care added 37,000. Restaurants and bars added...

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By Russ Henke on 4/25/2008 6:31 AM

Despite mounting evidence to the contrary, the current administration continues to deny that a recession is abroad in the land. Just a few days ago, Bush 43 rejected claims that the nation was in a recession, instead saying only, “We are in a slowdown.” If the economic facts in my April 23, 2008 blog entry were not enough, here are some more depressing data points on the US economy --- data just released late on April 24:Sales of new homes dropped by 8.5% last month to a seasonally adjusted annual rate of 526,000 units, the slowest sales pace since October 1991 (during Bush 41’s reign). The median price of a new home sold in March 2008 dropped by 13.3% compared with March 2007, the biggest year-over-year price decline since a 14.6% fall in July 1970 (during Nixon’s first term). New home sales were down in all regions of the country in March 2008: Northeast minus 19.4%, West minus 12.9%, Midwest minus 12.5%, and South minus 4.6%.Orders to US factories for durable manufactured goods fell for a third straight month...

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By Russ Henke on 4/23/2008 4:55 PM

Well, the US economy sure hasn’t improved any since my last blog entry in February 2008. Unfortunately, we are all sinking deeper into W’s second recession.Rising gasoline prices again tightened the squeeze on US drivers on Earth Day April 22, 2008, jumping for the first time to an average $3.50 a gallon of regular across the country - with no sign of relief. (Drivers here in the San Francisco Bay Area paid an average of $3.98 a gallon for regular). Crude oil set a record for the sixth day in a row on April 22, this time closing at $117.48 a barrel on the New York Mercantile Exchange. Diesel prices at the pump also struck a record of $4.20 a gallon, according to AAA and the Oil Price Information Service. That will add add to truckers' costs and drive up the price of food, clothing and other goods shipped by truck.It’s difficult to find good news anywhere across the US economic landscape.For example, it was revealed today (April 23) that Toyota took the global sales lead from General Motors in the first quarter,...

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By Russ Henke on 1/15/2008 11:47 AM

Our family is planning a modest addition to our relatively small house in California. We plan to utilize internal steel beams similar to those uniquely used in the existing house, built in 1995. We believe the steel cage created by these beams adds seismic stability. However, during the recent planning for the addition, we discovered that the building code in our city has changed since 1995. The steel gussets used where multiple beams are joined must now be designed per a newly adopted code with far stricter strength standards than before.We are gratified that the building code now has these stricter requirements, even though the CAD software used to design the original steel gussets in 1995 is identical to the CAD software used now.Because the design of our modest steel cage is no better than the skill and up-to-date code knowledge of the engineer/architect using the CAD software. It has always been thus – CAD software, old or new, is no substitute for the experience and savvy of the person wielding the tool.The...

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By Russ Henke on 1/12/2008 11:41 AM

“Forrester Research is predicting in its “Getting Work Done in Virtual Worlds” report that in five years 3-D Internet will be as important as the Web now is to businesses,” according to SandHill.com. The "Getting Work Done in Virtual Worlds" report released by Forrester during the first week of January 2008 concludes that executives should begin investigating and experimenting with virtual worlds soon because of their promise for remote collaboration, training and the ability to build and share 3-D models.The virtual model is especially important for professionals like surgeons, architects, engineers and product designers, who use CAD models or visualization systems to explore or create projects, Forrester said. In virtual meetings, these professionals can import models for discussion and modification, according to the report. "You can release near-final designs to a limited group of external users and solicit feedback before starting fabrication," it said.See http://www.computerworld.com/action/article.do?command=viewArticleBasic&articleId=9056602...

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By Russ Henke on 1/5/2008 10:34 AM

As follow up to the December 9, 2007 blog entry in this space, the Labor Department reported January 4, 2008 that only a measly 18,000 net non-farm US jobs were added in December 2007, the fewest since August 2003. At the same time, the nation's overall unemployment rate rose to 5% (from 4.7%), its highest level since November 2005.

US manufacturing continued its ongoing loses, with 31,000 US manufacturing jobs disappearing in December. The health of the manufacturing sector is key to revenue growth in the US CAD/CAM industry.

For the third consecutive month, wages grew slower than the pace of inflation, cutting into the real income of many US workers. But the FED will likely reduce interest rates still further to boost the deteriorating stock market, and ignore its alleged commitment to control inflation.

In the face of the above data, Bush 43 publicly said January 4, 2008 that the “nation’s economy is strong and solid” and he made no mention of the atrocious December jobs report.

By Russ Henke on 12/28/2007 1:35 PM

New-home sales in the US fell 9% in November from October to a seasonally-adjusted annual sales pace of 647,000, the US Commerce Department reported December 28, 2007. Economists were predicting November 2007 new-home sales to decline by only 1.8%. Over the last 12 months, new-home sales in the US have plunged by more than 34%, the biggest annual drop since 1991 (i.e. under Bush 41).

"I think you can classify what we are seeing in the housing market as a crash," said Mark Zandi, chief economist at Moody's Economy.com, according to the AP. "Sales and home prices are in a free fall. The downturn is intensifying."

Fed by the persistent lack of federal regulation in the mortgage market, the housing debacle has significantly increased the odds that the US economy will soon fall into a recession, the second one under Bush 43. We recall that his daddy presided over only one recession.

By Russ Henke on 12/19/2007 8:07 AM

The five-person Federal Communications Commission approved a controversial new rule to allow broadcasters in the twenty largest US media markets to also own a newspaper. The existing ban against this practice had been in place for thirty-two years. The White House has already pledged to veto any congressional action that seeks to change the decision.

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By Russ Henke on 12/9/2007 6:59 AM

The November 2007 jobs report was “the clearest sign yet that the American economy was headed for a substantial slowdown.” Mark Zandi, chief economist at Moody’s Economy.com, said that the November job creation numbers are “indicative of a very fragile US economy that will come undone unless conditions improve soon.” Meanwhile, the average hourly wages among rank-and-file US workers (i.e. the vast majority of us Americans) was just $17.63 last month, simply emphasizing the long-term erosion of spending power for most American workers in the last seven years.

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By Russ Henke on 11/23/2007 6:06 PM

Crude-oil futures ended November 23, 2007 at the highest-ever closing level. Crude oil for January 2009 delivery settled up 89 cents at $98.18 a barrel on the New York Mercantile Exchange. The session touched an intraday high of $98.45. Crude ended the week up $4.34, or 4.4%. The US dollar also helped boost oil as it touched a new historic low of $1.4966 per euro before “recovering” to $1.4834. A sliding dollar makes oil cheaper for buyers holding other currencies. These buyers are likely to increase demand and bid up oil prices. You think?

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By Russ Henke on 11/21/2007 7:34 AM

On November 19, 2007 from Bloomberg News comes word that shareholders in the securities industry are having their worst year since 2002, losing $74 billion of equity. But it appears that won't prevent Wall Street from paying record bonuses for 2007, totaling almost $38 billion. That's billion with a "b", folks! By way of comparison, Bloomberg News reported that the industry's 2007 bonuses are larger than the gross domestic products of Sri Lanka, Lebanon or Bulgaria. The average $201,500 bonus is more than four times the $48,201 median household income in the US last year, according to US Census Bureau statistics.

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By Russ Henke on 11/19/2007 7:19 AM

Just in time for the Annapolis peace conference planned for the last week of November 2007 comes news over the weekend November 17-18 from PBS: In Israel, a new word has been added to the official Hebrew Dictionary. The new word is “Condel”. It means, “to run around, have lots of meetings, and get nothing done.” Condel is a real word, frequently used in Israel and spreading elsewhere, inspired by the US Secretary of State Condi Rice.

By Russ Henke on 11/12/2007 6:52 PM

If you missed paying $35 per share in the Blackstone IPO in July 2007, you’ll be somewhat gratified by this news. Shares of Blackstone Group traded as much as 11% lower November 12, 2007, as investors reacted negatively to the private-equity firm reporting a third-quarter loss. The company's quarterly loss amounted to 44 cents a share. On average, analysts had been expecting Blackstone to earn plus 30 cents a share for Q3 2007.

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By Russ Henke on 11/10/2007 9:34 AM

The Figure: Number of US deaths in Iraq in October was 39.The Lie: “This number of 39 proves the surge is working.”The Facts: Bush implemented “The Surge” in January 2007. As of early November, the year 2007 had already become the deadliest year yet for US troops in Iraq. At least 852 American military personnel have died in Iraq so far this year — the highest annual toll since Bush began the Iraq war in March 2003.The Figure: Six US troops were killed when insurgents ambushed their foot patrol in the high mountains of eastern Afghanistan on November 9, 2007.The Lie: “The US vanquished the Taliban in 2001, to avenge 9/11.”The Facts: The year 2007 has just become the deadliest for US troops in Afghanistan since the 2001 invasion. The war in Afghanistan has evolved into an increasingly bloody counterinsurgency campaign, especially after many US troops were withdrawn to invade Iraq. Afghanistan is now the opium/heroin Poppy capital of the world. Pakistan is also a mess today. Osama is still at large.Related Facts:...

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By Russ Henke on 11/8/2007 7:22 AM

The Figure: On November 7, 2007, the US national average gas price for Unleaded Regular reached $3.04 per gallon.

The Lie: Autumn always means falling gasoline prices, as demand eases after the busy summer travel season.

The Facts: The average price per gallon of Unleaded Regular Gas has gone up 28 cents in 30 days. In some states the average price is much higher. In California, the price on November 7 averaged $3.31.

Related Fact: The price of a gallon of Unleaded Regular Gas when George W. Bush took office on January 20, 2001: $1.46

By Russ Henke on 11/7/2007 6:09 PM

The Figure: Real US gross domestic product (GNP) -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 3.9% in the third quarter of 2007, according to advance estimates released by the US Bureau of Economic Analysis at the end of October 2007.The Lie: “The proves that the economy of the US is strong and resilient.” The Facts: The advance estimate of GNP proves nothing. It’s a very preliminary estimate. The dramatic impact on GNP of the value of the US dollar being at record lows against foreign currencies has yet to be analyzed.The Figure: The US economy added 166,000 jobs in October 2007, the fastest pace in five months, the Labor Department said.The Lie: “The proves that the economy of the US is strong and resilient.” The Facts: (1) Even if accurate,166,000 is well below the level needed just to take care of the number of people entering the US job market every month from sheer population growth. (2) Nearly half of the October...

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By Russ Henke on 10/9/2007 4:44 PM

Most economic writers hailed the monthly unemployment report from the Labor Department last Friday October 5, 2007, as evidence that a US recession is now less likely. Net jobs created in September 2007 were a “healthy” 110,000, they gushed. The same writers also seemed pleased that the originally reported loss of 4000 jobs in August, was restated as a net gain for August of 89,000. The stock markets dutifully rose.However, few writers pointed out the troubling facts behind those numbers. First, as has been mentioned in this blog space before, figures like 100,000 new jobs in a month are far below the levels needed just to take care of the number of people entering the US job market every month from sheer population growth. Indeed, the unemployment “rate” rose in September to 4.7%, the highest in just over a year.Second, one has to look at exactly what sectors of the US economy are producing the gains. In September, the increases came from services that produce little real wealth or productivity increases: health...

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By Russ Henke on 9/23/2007 5:26 AM

Did your personal net worth increase by more than $300 million in the last 12  months ending August 31, 2007? No? Then you’re probably no longer eligible for  the Forbes list of the 400 richest Americans! Indeed, if your net worth is not  greater than $1.3 billion, forget it! The collective net worth of America’s 400  richest people rose $290 billion, to $1.54 trillion from $1.25 trillion last year,  or a 23.2% increase. What’s that you say? You didn’t even get a 23% raise in the  last year? 

Wall Street led the charge for wealth creation, despite the stock market problems  of recent months. Nearly half of the 45 new members of the list of 400 made their  new fortunes in hedge funds and private equity. The youngest member of the Forbes  400 this year is 33-year-old John Arnold, a former Enron trader who now runs hedge  fund Centaurus Energy and has now amassed a $1.5 billion fortune. And private  equity got a nice bail out this past week, when the Fed lowered interest rates by  an unexpected half point,...

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