Most recent blog entries

IBM and Dassault Systèmes: An Amiable Separation

Wed, 28 Oct 2009 12:58:00 GMT

Late on the evening of October 26, IBM announced its intention to sell its "IBM sales and client support operations encompassing DS's Product Lifecycle Management (PLM) software … customer contracts and related assets" to Dassault Systèmes. Since 1982, IBM has sold and supported Dassault Systèmes CATIA and related software. The announced sale, which is expected to close in the first half of 2010, ends that relationship.

IBM will receive $600 million in cash for its PLM business. Approximately 700 IBM employees, including PLM general manager Al Bunshaft, will join Dassault Systèmes.

Dassault Systèmes' competitors, Siemens PLM Solutions, Parametric Technology, and Autodesk, are likely to blow the current transaction out of proportion, claiming that Dassault Systèmes has lost a major sales advantage. In reality, this deal is likely to have modest impact on both companies.

IBM will be shedding a relatively small part of its software business that doesn't fit with its main strategy. Steve Mills, IBM Software Group senior vice president, has made it clear for several years that IBM wants to be in the business of selling system software and middleware. It no longer wants to sell applications, such as mechanical design and manufacturing software. Sales of CATIA software in 2008 amounted to 30-35 percent of Dassault Systèmes' total revenue, according the Dassault Systèmes CEO Bernard Charlès, or between $600 and $700 million.

For its part, Dassault Systèmes will be able to book increased revenues from the acquisition even if software sales to IBM customers don't rise at all. IBM's gross margin on CATIA, Enovia, and related software is about 50 percent, or about $300 million. Assuming Dassault Systèmes can keep prices up, that additional $300 million will, over the next 18 months, flow to its top line.

Charlès says customers also will benefit from IBM's divesting of the PLM software organization. For historical reasons, customers currently can buy some but not all of Dassault Systèmes' PLM software from IBM. Products that aren't in IBM's price book must be bought from Dassault Systèmes directly. This administrative quirk means that many large customers must negotiate two contracts in order to buy the full line of Dassault Systèmes' PLM software.

There is little doubt that Dassault Systèmes would not have been as successful as it is if IBM had not sold its software on mainframes and RS-6000 workstations beginning in the 1980s. But with IBM losing enthusiasm for application software, it may not have many more new large accounts to deliver. Dassault Systèmes already decided to choose another company, CAXA, instead of IBM to represent its products in China.

By taking control of its own sales efforts, Dassault Systèmes will be better able to work with other large corporations in information technology such as Hewlett-Packard, Oracle (soon to be the owner of Sun Microsystems), Tata Consultancy, and Dell Computer. Dassault Systèmes will continue to be one of IBM's Global Alliance marketing partners, a status also enjoyed by Parametric Technology and Siemens PLM Software. The French software giant now competes on an equal basis with the other major suppliers of higher priced CAD/CAM, CAE, and PDM software.

The challenge for Dassault Systèmes will be winning large new accounts and mid-sized accounts that promise to grow into large accounts. Historically, the company has done well in Europe, where 46 percent of its sales are generated. But Dassault Systèmes is a laggard in the Western Hemisphere from which it derives 31 percent of its sales. In contrast PTC and Autodesk pull in 38 percent of their revenues from the Americas. A risk to investors (among many) to Dassault Systèmes investors is that former IBM employees, stripped of Big Blue's imprimatur, may not be able to close deals with corporate IT departments as well as they once did.

Dassault Systemes to Acquire IBM's PLM Business Unit

brad.holtz@cyonresearch.com — Tue, 27 Oct 2009 05:00:00 GMT

A look at the next stage of the IBM-Dassault Systemes "marriage"

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MSC.Software…New Era Begins…

russ.henke@cyonresearch.com — Thu, 15 Oct 2009 00:01:00 GMT

In this space on September 30, 2009, the then-latest news on MSC,Software appeared, in a blog article entitled, “MSC.Software…in the news again…”.

As of today, October 14, the company posted a Press Release on its website announcing that Symphony Technology Group (STG) had successfully completed its acquisition of MSC.Software Corporation.

Under the terms of the deal, Maximus Holdings Inc., an investment vehicle of STG and co-investor Elliott Management Corporation has purchased all outstanding shares of MSC stock for a price of $8.40 per share in cash, a total purchase price of approximately $390 million.

Moreover, industry veteran Dominic Gallello joins MSC as CEO. Gallello comes to MSC from Graphisoft, a Budapest-based architectural design software developer, where he was CEO. In addition, Jim Johnson joins MSC as CFO. Johnson was most recently CFO of VG Holdings, a videogame producer that was acquired by Electronic Arts in 2007.

You can access the entire Press Release by copying & pasting this URL into your browser:
http://www.mscsoftware.com/About-Us/News/Default.aspx?articleid=1131

Siemens PLM NX 7.0...

russ.henke@cyonresearch.com — Thu, 08 Oct 2009 14:14:00 GMT

Siemens PLM Software just announced the latest release of NX™ software, the company’s flagship digital product development solution. With NX 7.0, Siemens PLM Software introduced HD3D, a visual environment to help global product development teams unlock the value of PLM information.

In addition, NX 7.0 included enhancements to synchronous technology – the computer-aided design, manufacturing and engineering analysis (CAD/CAM/CAE) productivity software introduced by Siemens PLM Software last year. (See blog entry in this space dated February 11, 2009, entitled, “Solid Progress…”).

The NX 7.0 enhancements are aimed at helping accelerate a variety of product development tasks and expand the ability of NX to work with data from third party CAD applications.

The announcement of NX 7.0 was made October 7, 2009 in Paris at the Siemens PLM Connection Europe annual users conference.

MSC.Software … in the news again…

russ.henke@cyonresearch.com — Wed, 30 Sep 2009 14:22:00 GMT

Back on July 9, 2009 in this blog space, a report appeared that MSC.Software had entered into a definitive agreement with affiliates of Symphony Technology Group (STG) under which a company controlled by STG would acquire all of MSC's outstanding shares in a one-step cash merger transaction valued at approximately $360 million. Under the terms of the agreement, MSC's stockholders were to receive $7.63 in cash for each share of MSC common stock. That price per share represented approximately a 13% premium to the closing price per share of MSC's stock prior to this announcement and approximately a 24% premium compared to the 90 trading-day trailing closing average price per share.

Within days of that definitive agreement, several law firms around the country launched class action suits, alleging that the “deal appeared to be unfair, given the fact that on June 1, 2009, MSC Software shares were trading at the exact price now offered, and that throughout 2008, MSC Software traded at significantly above the offer price, and as recently as October 2008, was trading above $10.25 a share, substantially higher than the current offer.”

That the original STG offer price of $7.63 per share was possibly too low was given some credibility when MSC.Software subsequently received an offer from at least one other would-be acquirer at a price higher than $7.63.

Indeed, on September 21, 2009, the MSC Board of Directors formally acknowledged that it had in fact received an offer from third-party private equity firms to acquire all of the issued and outstanding common shares of MSC at $8.30 per share in cash.

This formal announcement caused STG to react. On September 28, 2009, Symphony delivered to the MSC Board a revised offer to purchase MSC, the terms of which were not disclosed. However, it is presumed that STG’s revised offer is at least $8.30 per share, since the MSC Board of Directors determined that the offer from the other would-be acquirer no longer constituted a “Superior Proposal” and the MSC Board authorized MSC to re-enter into the amended Symphony deal.

In order to give stockholders sufficient time to consider the amended proposal, the special meeting of the stockholders of MSC previously scheduled for today (September 30, 2009) has been rescheduled for October 9, 2009. The time and place of the stockholders meeting was not announced. Stay tuned …

For more background on the MSC saga, readers may want to check out the July 9, 2009 blog in this space, and they may also want to read the MSC News Highlights in the MCAD Commentary on MCADcafe, released on August 20, 2009:
http://www10.mcadcafe.com/nbc/articles/view_article.php?articleid=730825

Job Cuts in August lowest in a year...

russ.henke@cyonresearch.com — Fri, 04 Sep 2009 13:09:00 GMT

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September 2009 EDA Industry Commentary posted…

russ.henke@cyonresearch.com — Thu, 03 Sep 2009 18:44:00 GMT

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US Manufacturing Growth…finally…

russ.henke@cyonresearch.com — Wed, 02 Sep 2009 10:31:00 GMT

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Latest Electronics IP and MCAD Industry Commentaries...

russ.henke@cyonresearch.com — Thu, 20 Aug 2009 17:48:00 GMT

COFES attendees and/or aficionados interested in the recent and future performances of key Electronics IP and MCAD/MCAE public software vendors are invited to read the latest quarterly Commentaries published on EDAcafe and MCADcafe Internet portals. (Earlier blog entries in this space on March 13, 2009 and June 07, 2009 provided access to similar articles for previous quarters).

The latest Electronics Intellectual Property (IP) Commentary was posted on August 18, 2009. It covers ARM, CEVA, MIPS, MoSys, Rambus and Virage Logic.
Copy and paste this URL into your browser:
http://www10.edacafe.com/nbc/articles/view_article.php?articleid=730002

The latest MCAD Industry Commentary was posted today. It covers ANSYS, Autodesk, Dassault Systemes, ESI Group, MSC.Software and PTC.
Copy and paste this URL into your browser:
http://www10.mcadcafe.com/nbc/articles/view_article.php?articleid=730825

(NOTE: The latest Electronic Design Automation (EDA) Commentary was posted on June 04, 2009. It covered Altium, Cadence, Magma, Mentor Graphics and Synopsys.
Copy and paste this URL into your browser:
http://www10.edacafe.com/nbc/articles/view_article.php?articleid=703692

A new EDA Commentary will be posted in the next few weeks).

Reading each of these is often enhanced by first clicking on the “Print” option at the top of the first appearance of each article.

The total number of MCAD and Electronics Industry quarterly Commentaries published by the authors since 2003 now stands at eighty (80).

Enjoy!

Data Reshaper for Microsoft Excel

brad.holtz@cyonresearch.com — Sat, 15 Aug 2009 05:00:00 GMT

Brian Seitz and I developed this data reshaper to get our survey data ready for Tableau Software. It still could use an error rountine. Be sure to read the notes and assumptions. Comments and improvements are welcome.

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