( ESNUG 544 Item 1 ) -------------------------------------------- [11/14/14]
Subject: Wall St. says Wally and Greg right on emulation plus Intel scoop
So 30 months ago, Wally Rhines and Greg Hinckley went ON RECORD saying that
their MENT Veloce sales would trounce CDNS Palladium sales by 2013:
> And to be sure this wasn't a slip of the tongue, MENT CFO Greg Hinckley
> said to Rich Valera of Needham & Company during the Q&A 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
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Then 8 months ago, Gary Smith's research note clearly showed that Greg and
Wally were wrong:
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Keep in mind Gary Smith was using only 2012 data:
"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."
- Gary Smith in ESNUG 537 #8
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And the new data now is that I got my hands on a recent Jay Vleeschhouwer of
Griffin Securities report (08/22/14) on MENT which has inadvertantly shed
new light on this story.
  
One difficulty I have with Wall St. analyst reports is that they're often in
"dense" financial language -- it's technically correct -- but it can be very
confusing to read. For example, they'll mix comments about the LAST QUARTER
and the LAST 4 QUARTERS -- plus many other confusions. Here's an original
quote from Jay that caught my eye:
"For the trailing year, therefore, emulation product revenues
would appear to have been slightly more than $150 million,
up by about half. Cadence's trailing-twelve-month product
revenues appears to have been about $120-$125 million, up
less than 5%."
After rereading it 6 times and making sure Jay was actually talking about
the 4 quarters of 2013, and that he was talking about emulation HW alone;
here's Jay's comment corrected-for-normal-people:
"For the trailing year 2013, therefore, Mentor Veloce emulation
product revenues would appear to have been slightly more than
$150 million, up by ~50%. Cadence's trailing-twelve-month
Palladium and RPP product revenues appear to have been about
$120-$125 million, up less than 5%."
Got that? It's Jay Vleeschhouwer of Griffin Securities inadvertantly saying
ON RECORD that Gary Smith is wrong; and that Greg Hinckley and Wally Rhines
were right all along! That is:
- From 2012 to 2013, total Veloce sales went up a whopping ~50%,
while total Palladium sales only went up 5%.
- And in 2013, $150 M Veloce sales beat $125 M Palladium sales.
Keep in mind this is one Wall St. analyst's view. Another analyst can (and
often does) see a different view.
 
But the takeway is at least one Wall St. analyst has now gone ON RECORD with
data showing that Greg and Wally were right back in 2012 when they claimed
MENT Veloce sales were going to beat out the CDNS Palladium sales in 2013.
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One other fun "tip" that I found in Jay's August 22, 2014 MENT report:
"One other incremental bookings possibility depends on whether
Intel comes back again for additional emulation capacity; this
is difficult to predict, and we have not included this in the
bookings estimates for the remainder of the year."
Got that? Jay's saying that Intel buying the new MENT Veloce boxes is an
unknown! Something's in play here! And you heard it first in DeepChip!
- John Cooley
DeepChip.com Holliston, MA
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