( ESNUG 375 Item 5 ) -------------------------------------------- [06/28/01]
Subject: ( ESNUG 374 #1 ) "Jealous" Analysts Made Those Anti-Magma Comments
> I'd echo what you've already heard about Magma. I have also heard from
> all the major EDA players that Magma was shopped heavily prior to this
> filing and that all the majors turned them down. Two reasons cited were
> failure to penetrate the market significantly in the past two years and
> a product that had trouble managing large designs.
>
> When I look at Magma, I think it looks like the banks are trying to turn
> EDA into the next Internet bubble. Early in the Internet craze, banks
> avoided bringing public companies with less than $18-$20 million in
> trailing twelve month sales. As the gold rush continued the standard
> got lower and lower. Many later deals were of lesser quality and had
> fewer sales.
>
> With $8.4 million in sales and this kind of burn rate, I'd say the
> investors who buy this thing after the large funds flip risk getting
> burned themselves.
>
> - Jennifer Jordan
> Sr. Research Analyst
> Wells Fargo Van Kasper Portland, OR
From: Dave Chapman <dave@goldmountain.com>
Hey John,
I think that Jennifer Jordan is mistaken about a venture rush into EDA. Six
months ago, the Sand Hill Bandits were saying that they had no interest in
doing another EDA company. The stated reason was that, since the total EDA
market is under $20 Billion, there was not sufficient upside potential.
Given the realities of what marketing costs, I have to agree.
So, the smart money is out of this investment space. I don't know about the
dumb money.
- Dave Chapman
Gold Mountain Consulting
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From: Ravi Nair <ravi@6d.com>
John,
Chanced to see your Magma filings. Looks like you are out to get them. :-)
1) Thought that the front page lead which says
"There's not only all the tape-out data there, but also lots of
detailed Magma bug talk and what it's like to really use Blast
Fusion",
was kind of misleading. If you actually go read user responses, they
were quite positive. And most of the bugs were supposedly prior bugs
which the user says were fixed in subsequent versions.
2) The flurry of analyst comments got me thinking on what was in it for
them to come out negatively against Magma. All I had to do was to go
to the CNET brokerage site
http://investor.cnet.com/investor/brokeragecenter
/reports-single-company/0-9910-1084-0-SNPS.html?tag=qbox
Of course, all four of them (Merrill, WF Van Kasper, Goldman and Dain
Rauscher) turned out to be Synopsys boosters who have put out buy
recommendations on Synopsys since May. All of them, like Van Kasper,
probably makes a market on Synopsys shares. What a biased bunch!
The only brokerage firm missing from the list of of those who made
recent Synopsys buy recommendations was Robertson Stephens. But of
course, they are underwriters for the Magma IPO!!!
http://www.hoovers.com/co/capsule/6/0,2163,99156,00.html
So how does one take these analysts' word as face value? Looks they are
trying to protect their hide and their clients' money. And may be sore that
they didn't get into the IPO action?
Got to admit though that you have tried to be fair trying to paint a true
picture of current Magma tapeouts, when you could have stuck by your earlier
rules and limited the number.
Ease up on these guys, will ya? It takes a lot of money and effort to go up
against entrenched market players. Also, it looks like they are getting
away from so called "internet era excesses", by trimming staff and trying to
get profitable. And you got to give it Magma for trying to tilt at the
windmills rather than going the timid route of other EDA start-ups who
restrict themselves to a niche with an exit strategy of being gobbled up by
the big three. It at least makes the market leaders take notice and try to
improve their products - and ultimately, it is the users who benefit
tremendously from this (like Intel-AMD-Transmeta).
- Ravi Nair
Sixth Dimension, Inc. Fremont, CA
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From: [ A Magma Employee ]
John,
Did you notice that all the negative comments from analysts about Magma were
from those who didn't get Magma business. It sure is a case of sour grapes.
Keep me anonymous.
- [ A Magma Employee ]
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