( ESNUG 537 Item 8 ) -------------------------------------------- [03/14/14]
Subject: Oops! Gary Smith's data shows Wally and Greg wrong on emulation
So first, to reset the stage so you know where this new news is coming from,
this story originally ran in DeepChip in Sept 2012:
> It all happened 4 months ago in a Mentor quarterly earnings call when, in
> the middle of chatting up how super duper extra good his Veloce 2 sales
> were going, Wally Rhines said (ON RECORD):
>
> "Based upon publicly reported numbers, that run rate puts us on
> track to achieve the #1 marketshare position this year in the
> rapidly growing emulation market."
>
> - Wally Rhines, CEO, Mentor Earnings Call (05/25/12)
>
> Did you get that? That's Wall Street speak by Wally publically saying his
> new Veloce 2 sales will overtake CDNS Palladium sales by Dec 31, 2012!
>
> Wow!
>
> And to be sure this wasn't some slip of the tongue, MENT CFO Greg Hinckley
> said to Rich Valera of Needham & Company during the Q&A part of that same
> earnings call (ON RECORD):
>
> "Rich, we think that, well, when we exit this year, that our revenues
> will be such that we can claim a #1 market share in emulation; so
> there is no slowing in the pace of bookings in the business or
> our shipments."
>
> - Greg Hinckley, CFO, Mentor Earnings Call (05/25/12)
>
> So it's no mistake: both of these MENT bigwigs are saying that MENT will
> beat CDNS in the emulation game by end-of-year!
>
> - from http://www.deepchip.com/items/0510-07.html
From: [ John Cooley of DeepChip.com ]
The takeaway that's important from the above quote is both Greg and Wally
told Wall Street they were going beat Palladium as they ended 2012.
After that story ran, I received this:
Hi, John,
Wally's fiscal year ends January 31st, not December 31st.
- [ A Sell Side Reader ]
Oops. Not end of the world, but I messed up a little. Off by 1 month.
---- ---- ---- ---- ---- ---- ----
Time passes...
---- ---- ---- ---- ---- ---- ----
Then last week, Gary Smith puts out a Research Note exactly on the topic of
who finally owned the 2012 hardware acceleration/emulation market.
After I read his note, I immediately phoned Gary.
me: "Wow! Your 3 charts say that Wally and Greg were wrong..."
Gary: "There's a few problems with saying that, John. The first problem
is the intended thrust of this research note was to show you how
the combined sales of acceleration, emulation, and rapid prototyping
grew 150% in the 4 years since the 2008 recession to 2012 and that
this specialty HW is the central tool in today's ESL flows.
See those "*'s" in the second chart? Each "*" shows a new product
introduction that year for that company. These typically mean a
better next generation chip has been released -- which can often
cause major swings in the emulation market share numbers.
The third problem is this is 2012 data. You might want to claim
that Greg and Wally were wrong, but they're wrong only for 2012.
We won't have the 2013 data until the next Market Trend reports
come out in October. This could dramaically change in 2013.
I think the more important picture here is the 150% growth (26%
CAGR) that CDNS/MENT/SNPS each own a part of. Growth is good."
So according to Gary, a more correct title of this story would most likely
read: "Gary Smith's data shows Wally and Greg wrong on emulation (for now)".
Sadly I couldn't get a "(for now)" to fit into the title space allotted.
- John Cooley
DeepChip.com Holliston, MA
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