23 February 2011

Can Carl Icahn change the eda world?

The electronics design automation – or EDA – world is complex, but for one reason and another, it's a world that changes little with time. The big three companies in the EDA industry – Mentor Graphics, Cadence and Synopsys – have been around for years, growing their empires through acquisitions and sniping at each other with predictable regularity. Change, when it does come to the chip design software world, is usually through the removal of competition or innovation; over the years, EDA companies have operated pretty ruthless acquisition strategies .

Now Mentor is back in the spotlight again; billionaire investor Carl Icahn has tabled a take over offer valuing it at more than $1.8billion. Three years ago, Mentor received a similarly unwelcome offer of $16 a share from Cadence. That offer fell through and the fall out saw the end of Cadence chief executive Mike Fister.
Icahn is focused on shareholder value; he wants the stock price to go up. By setting a hare running, he is hoping to invite other offers, forcing the price higher. But who might be interested in Mentor? Would another eda company want to make an offer? Would a private equity company feel itself up to the challenge? And if it did, what would be the consequences if Mentor had a couple of billion dollars of debt to service?
In the absence of another offer, Icahn's approach may well be accepted by Mentor's board and shareholders. If so, what might he then do? There are a number of choices. For example, he could break Mentor up and try to sell the constituent parts or he could install a new president and board and charge them with cutting costs, providing better returns for shareholders.
Despite booming sales of semiconductors, revenues in the eda world remain flat; mainly because these companies sell to a limited and captive audience. Squeezing more money from customers has been a perennial challenge, one generally solved by licensing and maintenance fees. What would make a difference to eda companies is for them to broaden their horizons beyond strict chip design. That's something which Cadence is trying to get underway with its EDA360 vision. Whether Icahn has a similar vision remains to be seen.
But what remains to be seen is whether Icahn's financial manoeuvring will bring any value for users of chip design software.

Author
Graham Pitcher

Supporting Information

This material is protected by Findlay Media copyright
See Terms and Conditions.
One-off usage is permitted but bulk copying is not.
For multiple copies contact the sales team.

Do you have any comments about this article?


Add your comments

Name
 
Email
 
Comments
 

Your comments/feedback may be edited prior to publishing. Not all entries will be published.
Please view our Terms and Conditions before leaving a comment.

Related Articles

Global semi sales climb 5%

Worldwide semiconductor revenue increased to $315billion last year, up 5% from ...

Sensor market back on track

Emerging markets such as the Internet of Things, wearable electronics and the ...

Rohm teams with imec

Rohm Semiconductor has joined imec's research programme to develop ultra low ...

Long road ahead for start ups

EDA and IP were common themes amongst the three start up companies featured at ...

BEEAs 2013 round up

The Grand Prix at this year's British Engineering Excellence Awards goes to the ...

A central role in tomorrow

When Gordon Moore observed many years ago that the number of transistors on a ...

The real solution to fake parts

The high tech supply chain is more vulnerable to counterfeit components than ...

Logging makes sense for testbench debug

The structured application of advanced logging techniques for SystemVerilog ...

High speed metasimulator

The High Sigma Monte Carlo (HSMC) metasimulator from Solido Design Automation ...

Signal processing libraries

Agilent Technologies has released SystemVue 2011.10, the latest update to the ...

3D electromagnetic simulation software

Agilent Technologies has today unveiled Electromagnetic Professional (EMPro) ...

Electronics Sourcing LIVE 2014

15th May 2014, Stadium MK, Milton Keynes, UK

Electronics Design Show 2014

22nd-23rd October 2013, Jaguar Exhibition Hall, Ricoh Arena, Coventry, UK

Always innovating

Check out this brief video promo for an all new website that explores TI ...

Altium design secret eight

If you have ever experienced the pain of diagnosing an fpga project design ...

Altium design secret six

Altium Designer is a unified electronics development tool - which means it ...

Truth is stranger than fiction

On April Fool's Day, you survey newspapers, the TV and the web for those less ...

Fast forward?

It's now four years since technology entrepreneur Dr Hermann Hauser produced a ...

More support for technology

Last week's budget saw further support from the Government for technology - ...

Sarah Macken, ESCO Council

ESCO's new chief executive tells Graham Pitcher that the electronic systems ...

John Richards, Oxford Digital

As the 2014 British Engineering Excellence Awards (BEEAs) programme launches, ...

Julian David, techUK chief

Graham Pitcher hears from techUK's chief executive about how the organisation ...