As previously discussed in this blog space, the Bush administration was slow and grudging in helping out the critical US auto industry, exacting many concessions and rules before it recently parted with a few billion dollars. Here is an update:The New York Times reported today that "The Treasury Department has agreed to take a stake of $5 billion in GMAC, the auto lending company, and agreed to lend $1 billion to General Motors to help GMAC reorganize itself as a bank holding company." The Treasury Department said "it would buy $5 billion in senior preferred equity with an 8 percent dividend from GMAC. It also said it is lending up to $1 billion to GM to help GMAC reorganize itself as a bank holding company. The agency said it was using funds from the $700 billion Emergency Economic Stabilization Act's Troubled Asset Relief Program to buy the GMAC equity make the loan to G.M." The Wall Street Journal also reported, "The move represents the second tranche of government aid that redounds to the benefit of...

As part of its continuing program of acquisitions to build analysis and simulation capability, Autodesk announced this week that it had signed a definitive agreement to acquire ALGOR, Inc. for approximately $34 million.

Headquartered in Pittsburgh, PA, ALGOR's computer aided engineering (CAE) software is used for product design and development in the automotive, aerospace, medical, consumer products, defense, energy and utilities industries.

The acquisition will strengthen the Autodesk solution for digital prototyping with advanced simulation functionality, including multiphysics, mechanical event simulation and fluid flow.

Electronic Design Automation (EDA) vendor Cadence Design Systems has been a frequent subject for blog entries in this space for months, especially since its CEO and four other executives suddenly resigned back in October 2008. Simultaneously, the company also delayed reporting its Q3 2008 financial results to launch an investigation of its financial methods and practices for all of 2008.Well, on December 10, 2008, Cadence finally reported the results of said investigation, and the news was not pretty.Cadence said it actually lost $169 million, or 67 cents per share, for Q3 2008, which certainly compares unfavorably with profit of $72.7 million, or 24 cents per share, in Q3 2007. The Q3 2008 revenue of course also declined dramatically, falling 42% to $232 million from $401 million in Q3 2007. The much-reduced Q3 2008 revenue figure still missed analysts' most-recent pre-December 10 estimates for Q3 2008 of $239 million.The company paid a dear price as it finally announced its Q3 2008 results. Trading near $4.00...

In previous blog entries in this space, we’ve talked multiple times about the building evidence of Bush 43’s second recession. For example, the 240,000 jobs lost in the US in October, the tenth consecutive month of job losses, brought the total job losses for 2008 to 1.2 million.

But the news released today is ridiculous and unforgivable! The Labor Department just announced that US employers slashed 533,000 jobs in November alone! This is the worst monthly number in 34 years!

The unemployment rate would be even higher if not for the exodus in November of 422,000 more frustrated people from the work force.

Job losses in November were widespread, hitting factories, construction companies, financial firms, retailers, leisure and hospitality, and others industries. The few places where gains were logged --- you guessed it -- the government and health services.

As if we needed confirmation, the “news” emerged on December 1, 2008 from the National Bureau of Economic Research, (despite repeated...

Cadence Design Systems, one of the Big 3 Electronic Design Automation (EDA) Vendors, has been the subject of frequent blog entries in this space, even before the top five execs resigned from Cadence in mid-October 2008 (see the related blog entry posted on October 19, 2008, entitled, “EDA Executives Pay the Price – and probably, so will many other employees”). Many updates in this blog space have followed.

The large reduction in Stock Market Capitalization suffered by Cadence since January 2008 is behind most of the company’s woes.

Since October, Cadence has been the public target of both real news as well as rumors, much of it negative.

The update today contains the difficulty Cadence endures just keeping up with those pesky SEC filings associated with Cadence’s Q3 decision to review its financial statements for 2008. For example, Cadence received a letter from The NASDAQ Stock Market on November 18, 2008 indicating that the company is not in compliance with the filing requirements under NASDAQ Marketplace Rule 4310(c)(14) because Cadence did not file in a timely fashion its Quarterly Report on Form 10-Q for the quarter ended September 27, 2008. Cadence must submit a plan to regain compliance no later than January 19, 2009, or risk being delisted from The NASDAQ Global Select Market.

...

The turbulence at EDA vendor Cadence Design Systems has been the topic of frequent blog entries in this space since mid-summer 2008. While the company’s Q1-Q3 2008 financials have still not been re-stated, and a new CEO has still not be named to replace Mike Fister, who resigned in mid-July, Cadence did make some executive promotions this week aimed at stabilizing the employee base. On November 21, 2008, Cadence announced the promotion of three senior managers to executive positions in R&D and Worldwide Sales and Field Operations. All three come from inside Cadence ranks and all report to the “Interim Office of the Chief Executive.” Dr. Chi-Ping Hsu, 53, was named senior vice president of research and development for the Implementation Products Group. Dr. Hsu joined Cadence in 2003 from Get2Chip, Inc. Mr. Nimish Modi, 46, was named senior vice president of research and development for the Front End Group. He came to Cadence in 2006 from Intel. Finally, Mr. Tom Cooley, 46, was named senior vice president of Worldwide...

Despite the economic and security importance of the US Auto Industry and the strong arguments to the contrary from many sectors (see for example the November 19, 2008 blog entry in this space containing excerpts from Pat Buchanan), prospects for an immediate US auto industry bailout look bleaker today (November 20):The AP reported, "Congress, unwilling or unable to approve a $25 billion bailout for Detroit's Big Three, appears ready to punt the automakers' fate to a lame-duck Republican president. Caught in the middle of a who-blinks-first standoff are legions of manufacturing firms and auto dealers -- and millions of Americans' jobs -- after Senate Democrats canceled a showdown vote that had been expected Thursday (today)." The Politico added that the "year-end drive to win new aid for the ailing auto industry was near collapse." The Wall Street Journal added that Senate Majority Leader Harry Reid "backed away from efforts to force a vote this week" on the Democratic bailout bill. He said he "might move...

Further to previous blog entries in this space, we call your attention to key excerpts from the November 18, 2008 blog of Patrick J. Buchanan, entitled, “As GM Goes, So Goes the GOP”:In the original bailout, “Hank Paulson demanded $700 billion to haul away the trash in the dumpsters of JPMorgan Chase and Goldman Sachs — assuring us that he could hold a garage sale of the junk. Now (mid-November) we hear from Paulson that the $700 billion Congress voted will not, after all, be used to buy up rotten paper on the books of the big banks. Some banks are using the cash to buy other banks.So Republicans are right to be enraged. But they are now about to do something terminally stupid. With GM, Ford and Chrysler teetering on the brink, they are turning a cold stone face to Detroit and are about to follow the counsel of that quintessential Bushite Dick Darman, who said of our computer chip industry, “If our guys can’t hack it, let ‘em go.” America responded — by letting George H.W. Bush and Darman go.Are Republicans aware...

Further to recent blog entries in this space, these figures about the deteriorating market caps of the Big 3 Electronic Design Automation (EDA) Vendors are sobering:

• Synopsys has lost 36% of its value since January 1, 2008. Market Cap is approximately $2.32 billion at this writing.

• Mentor Graphics has lost 49% of its value since January 1, 2008. Market Cap is approximately $557 million at this writing.

• Cadence has lost 77% of its value since January 1, 2008. Market Cap is approximately $975 million at this writing.

Further to the blog entry in this space yesterday (November 14, 2008), you may be interested in the article below that appeared in the New York Times today (November 15, 2008):

Tech Industry, Long Insulated, Feels a Slump (ASHLEE VANCE)

Paste this URL into your browser:

http://www.nytimes.com/2008/11/15/technology/15tech.html?_r=1&th=&adxnnl=
1&oref=slogin&emc=th&adxnnlx=1226769111-PR7FqvP6jAozYEOGWeHAxg

With the recession spreading to the semiconductor sector, the impact on Electronic Design Automation (EDA) vendors can’t be far behind. And the woes of the semiconductor companies are making news.Applied Materials, National Semiconductor and AMD, the latest in the chip sector to feel the economic slump, announced cuts in their work forces and also announced downbeat financial projections.The Wall Street Journal reported today (November 14, 2008) as follows: Applied, considered "the sales leader among makers of tools for manufacturing chips, said it will cut 1,800 jobs, or 12% of its work force, through a combination of attrition, voluntary severance and other reductions." The company "announced the planned reductions -- expected to reduce expenses by about $400 million a year -- along with a 45% drop in profit for the fiscal fourth quarter ended October 26, 2008 and said it expects further declines in sales and orders in the current quarter." National Semiconductor "said it will cut nearly 5% of its work force,...

As if we didn’t have enough to worry about, the November 13, 2008 Wall Street Journal reports, "Three of the largest makers of computer and video screens, Sharp Corp., LG Display Co. and Chunghwa Picture Tubes Ltd., pleaded guilty to criminal price-fixing charges and will pay fines totaling $585 million. As a result of the price fixing," the US Justice Department said, "electronics manufacturers and, ultimately, consumers were forced to pay higher prices for televisions, cellphones and other products using liquid-crystal displays." According to the US officials, "Products affected by the price fixing included Apple Inc. iPods and Razr phones from Motorola Inc. as well as laptops and computer monitors from Dell Inc." The US Justice Department also noted, the New York Times reports November 13, 2008, "Prices for the flat screens in televisions, personal computers and cellphones have plummeted in recent years -- but the decline would have been even faster if it hadn't been for an international price-fixing...

While President-elect Obama and Democratic House and Senate leaders are pushing urgently for quick action on financial assistance to help the troubled US auto industry, with hundreds of thousands of jobs hanging in the balance, we discover today (November 11, 2008) a semi-secret giveaway (after the fact) to banks that so far are hardly helping boost the economy, to wit:   Some of the nation's biggest banks are in for a windfall - on top of the $700 billion government bailout - thanks to a new tax    policy quietly issued by the Treasury Department. The notice gives big tax breaks to companies that acquire struggling banks   hit hard by the mortgage crisis. In some cases, the tax breaks could exceed the cost of acquiring the banks, according to   analyses by private tax experts! The change could cost the Treasury as much as $140 billion extra by enabling firms      that acquire struggling banks to use more losses incurred by those banks to offset their own taxable profits.   The notice was silently issued September...

Further to the blog entries in this space of November 6, 2008, named, “Latest Fuld News…”, and on November 4, 2008, entitled, “On Executive Pay & the Bailout”, and of September 18, 2008, called, “Poster Child”, the following article appeared in the New York Times on November 9, 2008:    “How the Thundering Herd Faltered and Fell” This article by Gretchen Morgenson is compelling reading about how Merrill Lynch finally imploded in the unregulated financial environment of the last 8 eight years.But one telling factoid emerged that just has to be explicitly added to our blog entry list of “poster children” executives who were handsomely rewarded after driving their companies to the brink of financial ruin:    In October 2007 Merrill’s board ousted Mr. E. Stanley O’Neal. On top of the $70 million in compensation he was        awarded during his four-year tenure as chief executive of Merrill Lynch, Mr. O’Neal departed with an exit package    worth $161 million. Recall that Merrill Lynch was taken over by Bank of America...

The US unemployment rate zoomed to a 14-year high in October 2008 as another 240,000 jobs were cut, far worse than expected, providing unquestionable evidence of Bush 43’s deepening second recession. The new data, released November 7, 2008 by the US Labor Department, showed the US jobless rate rose to 6.5% in October from 6.1% in September. Current unemployment has now surpassed the high seen after Bush 43’s first recession in 2001, when the US jobless rate peaked at 6.3% in June 2003. This October’s decline marked the 10th straight month of payroll reductions, and Labor Department revisions showed that job losses in August and September 2008 were actually much deeper than first estimated. Employers cut 127,000 positions in August, compared with 73,000 previously reported. And some 284,000 jobs were cut in September, compared with the 159,000 jobs first reported. So far in 2008, 1.2 million jobs have disappeared; over half the decrease occurred in the past three months alone.What a legacy!...

On November 5, 2008 Cadence announced the commencement of a restructuring program designed to “focus the company's strategy, streamline the business and improve operational execution and financial performance.” Once completed, the company expects to achieve annual operating expense savings of at least $150 million through a combination of workforce and other expense reductions. The company expects to eliminate at least 625 full-time positions, representing 12% of its global employee base, plus a substantial number of contractors and consultants. Because of varying regulations in the jurisdictions and countries in which Cadence operates, workforce reductions will be realized over a period of time and are expected to be completed in the second half of fiscal 2009. Cadence expects to record a restructuring charge of approximately $65 million to $70 million pre-tax, $48 million of which will be recorded in the third quarter of 2008. As this blog entry is posted, Cadence shares are trading at $4.33 each, yielding a...

Further to the blog entries in this space of November 4, 2008, entitled, “On Executive Pay & the Bailout” and of September 18, 2008, called, “Poster Child”, the following information appeared on the news wires late on November 5, 2008, paraphrased here:Richard Fuld will now step down as Lehman Brothers CEO by the end of the year, and he won't receive severance or a bonus. He will then stay on as chairman of the board. Fuld has been a target of public outrage over risky practices on Wall Street which helped send the US economy spiraling into turmoil.New York State Comptroller Thomas DiNapoli has accused Fuld of leading Lehman to its Chapter 11 filing on September 15, 2008. "Mr. Fuld's decisions drove the company toward ruin, as his board stood idly by," DiNapoli argues in court papers filed late November 4, 2008, asking a bankruptcy judge to appoint an independent investigator in the case.Comptroller spokesman, Jim Fuchs, said Fuld’s resignation would be a good first step. While Fuld had offered to resign on September...

One of the most irritating issues for most Americans in recent years, has been the unprecedented rise of corporate executive salaries, especially those of CEO’s, compared to the incomes of average US workers. In frequent cases, this ratio has reached 400:1. This disparity has become especially galling since 1999, because average workers’ income in the US has not even kept up with inflation, while CEO pay has ballooned.Such irritation reaches still another level when CEO’s who head poorly performing companies are finally ousted, but having still collected exorbitant pay and lucrative golden parachutes. (See for example the blog entry in this space from September 18, 2008, entitled, “Poster Child”, which discussed Nicholas Kristof’s Op-Ed piece published in the September 18, 2008 New York Times, “Need a Job? $17,000 an Hour. No Success Required." Kristof’s article was about one Richard Fuld, the longtime chief of Lehman Brothers. He took home nearly half-a-billion dollars in total compensation between 1993 and...

Further to the 10/28/08 blog entry in this space….Today, on the eve of Election Day, the news broke that Bush 43’s Treasury Department has turned down a request by General Motors for a mere $10 billion to help finance the automaker’s possible merger with Chrysler. Meanwhile, it was announced today that GM's US sales plunged 45% in October 2008, the worst drop of any major automaker. Indeed, if GM's sales were adjusted for US population growth, October 2008 would be the worst month for GM since World War II. (For its part, Chrysler’s sales dropped 35% in October 2008).The jobs of hundreds of thousands of US auto workers hang in the balance.Simultaneously, Bush 43’s Treasury Department said today that it plans to borrow more than $500,000,000,000 in the current October-December 2008 quarter. And as its parting gift to the next administration, the government will likely have to borrow another $368 billion in the first three months of next year; moreover, the government's borrowing for the whole of next year will...

Further to the recent blog entry in this space on October 26, 2008, entitled, “Cadence Update…”, as well as to prior related blog entries, still another news item has appeared since:

On October 30, 2008 Dyer & Berens LLP announced that a class action has been commenced in the United States District Court for the Northern District of California on behalf of all purchasers of Cadence Design Systems, Inc. common stock during the period between April 23, 2008 and October 22, 2008.

The case is entitled Hu v. Cadence Design Systems, Inc., Michael J. Fister, William Porter and Kevin S. Palatnik.

The complaint charges Cadence and certain of its current and former officers with violations of the Securities Exchange Act of 1934.

Having failed so miserably to help the US economy by repeatedly cutting interest rates over the last year (the rate stood at 5.25% as late as the spring of 2007), the Federal Reserve is expected to try it once again – planning to cut its target interest rate on October 29, 2008 by another one-half a percentage point (down to 1 percent … recall the definition of insanity, etc., etc…). One percent is the level to which the Fed cut interest rates in 2003, still trying to recover from Bush 43’s first recession in 2001.Notwithstanding the relative ineffectiveness of such interest rate reductions, the cuts nevertheless acutely hurt the segment of Americans who are on fixed incomes, and who for years may have frugally saved some money for retirement, only to see their already-meager interest income from their small nest eggs slashed once again.Not surprisingly, falling US home prices, chronic US unemployment and sinking stock & cash investments have driven consumer confidence to record lows in October. The Conference...

Further to the recent blog entry in this space on October 23, 2008, entitled, “Cadence Woes Continue…”, as well as to prior related blog entries, two more news items have appeared since:

1. Cadence shares dropped to $2.70 each in after hours trading on Friday October 24, 2008, further reducing Cadence’s market cap to just north of $700 million (Mentor Graphics’ market cap stands at $642 million, and Synopsys' is at $2.33 billion).

2. A law firm called Finkelstein Thompson LLP (Washington, DC & San Francisco) announced it “was investigating Cadence Design Systems following the announcement that Cadence was indefinitely delaying its third-quarter earnings report and expected to restate its financial reports for the first half of 2008.”

Over and above the Cadence troubles outlined in the blog entry in this space on October 19, 2008, called, “EDA Executives Pay the Price – and probably, so will many other employees”, the company announced still more problems yesterday when it postponed its promised final Q3 financial results. On October 22, Cadence announced that “it is reviewing, in conjunction with the company’s independent accountants and legal advisors, the recognition of revenue related to customer contracts signed during the first quarter of 2008.” Apparently, some $24 million in revenue associated with those contracts was booked in the first quarter but should have been booked over the duration of the contracts starting in the second quarter. Should this prove to be the case, Cadence will have to restate both Q1 and Q2.In postponing yesterday’s Q3 earnings announcement, the company reiterated its earlier Q3 guidance from July 23, 2008: the company expects Q3 revenue to be in the range of $235 to $245 million; third quarter GAAP net loss...

The “goings on” in the Electronics Design Automation (EDA) industry have frequently appeared in blog entries here. The last entry appeared as recently as October 17, 2008, entitled, “Autodesk and ESCCAD”, which discussed the latest example of the unmistakable trend of merging Mechanical CAD and CAE with Electronic Design Automation. Prior to that article, a related entry appeared on October 10, 2008 called, “Mentor and Flomerics - Tighter EDA/MCAD Collaboration.” And before that an associated entry appeared on September 19, 2008, entitled, “More EDA and MCAD Collaboration.” Other recent blog entries in this space commented on the possible deals between EDA vendors themselves. See for example the August 16, 2008 entry called, “The Big 3 EDA Vendors to remain the Big 3 – for now!”It turns out that the central topic of that August 16 blog submission, which dealt with the failed attempt of Cadence to take over Mentor this summer, is directly connected to the fresh news that broke on October 15, 2008, that the CEO...

The unmistakable trend of merging Mechanical CAD and CAE with Electronic Design Automation has been frequently highlighted in multiple blog entries in this space. The most recent entry appeared on October 10, 2008 called, “Mentor and Flomerics - Tighter EDA/MCAD Collaboration.” An entry before that appeared on September 19, 2008, entitled, “More EDA and MCAD Collaboration.”On October 15, 2008, Autodesk announced it had completed the acquisition of Elektro-CAE-Software GmbH (ECS), a provider of electrical computer-aided design (CAD) software from Mensch und Maschine Deutschland GmbH.ECSCAD software is said to complement AutoCAD Electrical software, which is used to create schematic-based designs. Both product lines are built on the AutoCAD platform. Autodesk says it can now enhance functionality and performance for both ECSCAD and AutoCAD Electrical customers."The acquisition of the ECSCAD technology extends Autodesk's leadership in Digital Prototyping and will allow European electrical design engineers to integrate...

The unmistakable trend of merging mechanical CAD and CAE with Electronic Design Automation has been frequently highlighted in multiple blog entries in this space. The most recent entry appeared on September 19, 2008, entitled, “More EDA and MCAD Collaboration.”

On that date, the three-year cooperation between EDA vendor Mentor Graphics and MCAD vendor PTC was discussed, but in previous blog entries here, the pursuit of Flomerics by Mentor Graphics was described.

Today Mentor announced final completion of its acquisition of Flomerics Group PLC., a UK-based supplier of computational fluid dynamics analysis products.

Flomerics becomes the Mechanical Analysis Division of Mentor, headed by Gary Carter, former CEO of Flomerics, reporting to Henry Potts, vice president of Mentor Graphics and general manager of the Systems Design Division in Longmont, CO. This acquisition not only complements Mentor’s existing offerings in printed circuit board (PCB) systems design with advanced electronic cooling...

As our country drowns in its most severe financial crisis since the Great Depression, it’s easy to forget the dozens of other ills from which the nation is suffering, all brought on by government and corporate greed, incompetence, and deregulation, or a combination of all three.Our crumbling infrastructure of dams, highways and bridges is one of those illnesses written about in previous blog entries in this space. For example, see the August 4, 2008 blog entry entitled, “Interstate 35-W Bridge Collapse -- One Year Later.”However, one bright spot occurred this week in this sea of darkness. The new Interstate 35W bridge is finally open in Minneapolis, thirteen and a half months after the last one collapsed into the Mississippi River. Lest we forget, the August 1, 2007 bridge collapse killed 13 people and injured 145.On September 18, 2008, hundreds of vehicles lined up on both sides, some waiting hours for the new bridge to open a few minutes after 5:00 AM CDT. Then they inched, bumper to bumper, onto the new $234...

In a blog entry in this space on August 2, 2008, we reported that the acquisition of Electronic Design Automation (EDA) vendor ANSOFT by Mechanical Computer Aided Analysis (MCAE) vendor ANSYS had been fully realized.The concluding paragraphs of that August 2nd blog entry read as follows:“While the notion of offering combinations of mechanical and electronics software tools is not new (reference Applicon in the early 80’s and Mentor Graphics PCB Division in the early 90’s), the combination of ANSYS and ANSOFT may arguably give ANSYS one of the most comprehensive, independent engineering simulation software suites in today’s industry. Look for other deals similar to this one to occur between MCAE/MCAD and EDA vendors going forward.”Well, yesterday September 18, 2008, a fresh collaborative deal between EDA vendor Mentor Graphics and MCAD vendor Parametric Technology Corporation (PTC) was announced. The new capability is being portrayed as “the industry’s first design collaboration between Electrical (ECAD) and Mechanical...

If an observer had to choose just one example among the dozens of disastrous ills affecting this nation’s ongoing financial crises, the poster child may well be the exorbitant pay that corporate executives accept from obliging boards of directors and hapless shareholders, including current salaries and golden parachutes, even when the executives' companies are performing horribly.

It may be worth your attention to read Nicholas Kristof’s Op-Ed piece published in the September 18, 2008 New York Times, “Need a Job? $17,000 an Hour. No Success Required."

If you missed it, click on:

http://www.nytimes.com/2008/09/18/opinion/18kristof.html?th&emc=th

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...