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Parametric Technology's license revenues slumped 14 percent in the quarter that ended January 2, 1999, compared to the like period a year earlier. Total sales slipped only three percent, thanks to a 13 percent increase in service revenues. PTC's managers blamed the shortfall on an October sales force reorganization that stopped direct sales to firms with total annual revenues of less than $10 million. Such firms number between 6,000 and 7,000, according to chief financial officer Ed Gillis, more than a quarter of PTC's total customer base of 24,000 companies. Sales to the smaller firms were supposed to have been made by PTC's "master distributor," Rand Technologies of Mississauga, Ontario, and by independent dealers that buy Pro/Engineer from Rand. But Rand's president, Brian Semkiw, said his salespeople spent much of the quarter just getting to know PTC's customers. Slow sales to small companies don't explain the entire shortfall, however. Gillis told analysts that sales to smaller firms fell by $7 million compared to the previous quarter while license revenues slid $11.1 million. Restrictions on whom they could sell to didn't sit well with some independent resellers of Pro/Engineer and Pro/Desktop. Since October, three in California - Hawk Ridge Systems in Oakland, CAD Research in Costa Mesa, and Pacific Automation in San Diego - switched to SolidWorks, as did Columbia Gorge Technology in Milwaukie, Oregon. Nevertheless, Rand's Semkiw said his company actively seeks to increase the number of independent dealers it supplies, currently 60 worldwide and about 20 in the U.S. Semkiw said the cap on customer size will probably rise over time, possibly to $150 million. r Mentor Graphics wisely abandoned its hostile bid to acquire Quickturn Design Systems, the maker of hardware emulators for verifying integrated circuit logic. Instead, Quickturn agreed to be acquired by Cadence Design Systems for stock worth $15 per share or $271 million for the whole company. The good news for Quickturn's engineers, marketers, and customers is that Cadence will continue to make its existing product lines. Mentor had intended to phase out Quickturn's products in favor of its own Celaro line of emulation equipment. The not--so--good news is that we can't think of any companies whose products and service have improved after being merged into the huge Cadence organization. r On January 21, Parametric Technology announced that it will purchase Division Limited for $46 million in cash. Division, whose 12--month sales amounted to just $10 million, is losing money, but it has some good software. Division's dV/Review and dV/Reality software for large--scale digital mockup (described in the December 1996 CAD Report) elicits kudos from customers and is tolerably well integrated with Pro/Engineer. In September 1998 Division purchased Object Logic, a company with neat--looking viewing software for three--D CAD models. In the past, software acquired by PTC (such as CDRS and Mechanica) has been optimized for Pro/Engineer with little attention to other CAD programs. A spokesperson for PTC said his company will break that pattern with Division, whose software displays models from most major CAD systems. If Parametric Technology remains true to this promise, it could become a serious competitor to Engineering Animation, the largest player in the digital mockup niche. How much can you save by buying Visio's IntelliCAD instead of Autodesk's AutoCAD? More than half a million dollars, according to Commonwealth Edison, Chicagoland's electric utility. That's how much Com Ed saved on a 300--seat deal intended to expand CAD use beyond "our core drafting and design department," said Ken Cicirale, an engineering department supervisor. The utility chose IntelliCAD over similarly priced AutoCAD LT because the former runs Autolisp programs that automate routine functions such as drawing electrical symbols with specific property information. Cicirale said that IntelliCAD will be used for drawing two--dimensional one--line diagrams by about 220 engineers who have not previously used CAD. Another 80 workers will be upgraded from AutoCAD release 12 to IntelliCAD. Most of the savings realized were due to the lower purchase price, but Com Ed also figured that the cost of training new users to operate IntelliCAD would be lower than it would be for AutoCAD release 14. CAD outfits seeking a piece of the action in lieu of traditional fees for licenses might want to consider the sad histories of Artisan Components and Aspec Technologies, two outfits that develop component libraries for makers of application--specific integrated circuits (ASICS). Last year, Artisan came up with the not--so--good idea of allowing ASIC vendors initial free use of its libraries in exchange for royalties of $25 to $50 for each wafer that included the library designs. Rival Aspec was forced to follow suit. Both companies reported sales declines and losses in the fourth quarter of 1998. Will there be a silver lining? One industry executive doesn't think so. Most chips don't become hot sellers, so volumes are modest. If one did become a hit, the maker would have strong incentive to design future models using royalty--free libraries. Duet Technologies, which purchased the Cascade Design Automation in 1998, has fired 13 percent of its employees. Hardest hit was its Bellevue, Washington development facility, which was originally Cascade's headquarters. The decision marks the end of the Epoch software for IC layout, a product that traces its roots to the so--called "silicon compilers" of the 1980s. A spokesperson for Duet said that the company will continue to develop Masterport, a program that employed dimension--driven models of IC cell libraries that could be automatically resized to suit new (and smaller) process technologies. Duet's strategy has been to de--emphasize software licensing in favor of selling design services by teams in the U.S. and India. Masterport will only be used internally for service work and will not be licensed to other firms.
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Publication:CAD/CAM Update
Date:Feb 1, 1999
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