> Secondly, the you-can't-bamboozle-money-out-of-Aart in #2, means SNPS made
> a boatload of cash on this Intel deal.  (That rumor of Aart squaring off
> with "that one company" in Q3/2004 proves this point even more.)
>
>     - from http://www.deepchip.com/gadfly/gad082207.html


From: Andy Jones <andy.d.jones=user domain=lmco hot calm>

Hi, John,

Hold on, here.  How do you know it wasn't Intel that got the whale of a deal
on discounts for tools in exchange for the public announcement?  In that
case, Synopsys would likely get LESS cash directly, but perhaps more cash
indirectly due to the marketing boost from such an announcement.

    - Andy Jones
      Lockheed Martin                            Dallas, TX

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From: John Cooley <jcooley=user domain=zeroskew hot calm>

Hi, Andy,

Concerning your "marketing boost" question, because Synopsys is already an
established company, any general Intel endorsement like this has zero impact
on any hands-on EDA end user behavior.  Let me put that another way.  For
users there's no measurable sales difference between:

  "Synopsys tools are used by ST, TI, IBM, Infineon, HP, AMD, LSI, Toshiba,
   Broadcom, Agere, Motorola, SUN, Agilent, Siemens, NEC, Conexant, ADI,
   Fujitsu, Nvidia, PMC-Sierra, Qualcomm, Sony, Lucent, Nokia, IDT, Samsung,
   Vitesse, Nortel, TSMC, Lockheed-Martin, Raytheon, Micron, Marvell, AMCC,
   Unisys, Harris, Tektronix, Homeywell, Cisco, Micronas, EMC, Matrox, 3com,
   Ericsson, Tundra, Emulex, Bosch, Maxtor, Rockwell, Boeing, Apple, Cirrus,
   Sharp, BAE, Renesas, Panasonic, Xerox, Hughes, Scientific Atlanta, OKI,
   Medtronic, Hitachi, Guidant, Brocade, Lexmark, Mitsubishi, UMC, Tower,
   Juniper, Calix, Mitre, Zoran, GE, Mercury Computers, Sanyo, Cray, Azul,
   SGI, Draper, Seagate, Canon, NCR, Kodak, Avici, Sandisk, Raza, Chartered,
   UTC, Hynix, Smiths, Luxtera, KLA-Tencor, Corrent, and Freescale."

and

  "Synopsys tools are used by ST, TI, IBM, Infineon, HP, AMD, LSI, Toshiba,
   Broadcom, Agere, Motorola, SUN, Agilent, Siemens, NEC, Conexant, ADI,
   Fujitsu, Nvidia, PMC-Sierra, Qualcomm, Sony, Lucent, Nokia, IDT, Samsung,
   Vitesse, Nortel, TSMC, Lockheed-Martin, Raytheon, Micron, Marvell, AMCC,
   Unisys, Harris, Tektronix, Homeywell, Cisco, Micronas, EMC, Matrox, 3com,
   Ericsson, Tundra, Emulex, Bosch, Maxtor, Rockwell, Boeing, Apple, Cirrus,
   Sharp, BAE, Renesas, Panasonic, Xerox, Hughes, Scientific Atlanta, OKI,
   Medtronic, Hitachi, Guidant, Brocade, Lexmark, Mitsubishi, UMC, Tower,
   Juniper, Calix, Mitre, Zoran, GE, Mercury Computers, Sanyo, Cray, Azul,
   SGI, Draper, Seagate, Canon, NCR, Kodak, Avici, Sandisk, Raza, Chartered,
   UTC, Hynix, Smiths, Luxtera, KLA-Tencor, Corrent, Freescale, and Intel."

With Intel added, did you suddenly now have the urge to rush out & buy more
Design Compiler licenses?  TetraMAX?  PrimeTime?  Hercules?  VCS?

I thought not.

On top of that, the financial community *already* knew years ago that Intel
was a big time Synopsys buyer.  (Hell, it was the Wall Street weenies who
had helped me find out exactly how much Intel had historically paid in prior
years for Synopsys tools!)

For the users, this belated Intel endorsement was a marketing/sales NOOP.

For Wall Street, it's also almost a NOOP except for the *additional* new
revenue it reports.  To me, that's what was the big news.

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The fun part is figuring out how much *more* money this deal means.  Why?
Because it's obviously one of those weird little Intel schoolgirl "secrets"
that they don't want you to know -- otherwise the terms would have been
mentioned in the press release.  Freaking Intel freaks being freaky!  Oy!

         ----    ----    ----    ----    ----    ----   ----

The first task is to establish the baseline Intel Synopsys spending.  That's
easy.  Buried in the 125 page 2006 Synopsys 10-K, you'll find:

   "Revenue derived from Intel Corporation and its subsidiaries in the
    aggregate accounted for approximately 11%, 13%, and 11% of our total
    revenue for the fiscal 2006, 2005, and 2004, respectively."

Here's that same data in dollars.

   Synopsys revenue from Intel in 2004:   $120.1 million
                                  2005:   $129.0 million
                                  2006:   $120.5 million

From the Synopsys Q3 FY2007 Financial Supplement:

   Total Synopsys revenue by quarter in Q406:    $283.4 million
                                        Q107:    $300.2 million
                                        Q207:    $292.9 million
                                        Q307:    $304.1 million
                                       ------  ----------------
                                       Total:  $1,180.6 million

A bottom baseline of Synopsys-Intel revenue for past 12 months:

                  11% of $1,180.6 million = $129.9 million

An upper baseline of Synopsys-Intel revenue for past 12 months:

                  13% of $1,180.6 million = $153.7 million

My own bias tends to favor the bottom baseline ($129.9 million) because it's
more in line with the prior 2004-2005-2006 reported Synopsys Intel revenues.

Now, also from the Synopsys Q3 FY2007 Financial Supplement:

   "Aggregate backlog - Turns to revenue in 4 quarters"

                          Q406:    $980 million  <-- flat
                          Q107:    $980 million  <-- flat
                          Q207:    $970 million  <-- flat
                          Q307:  $1,020 million  <-- a $50 million jump!

The $50 million jump in backlog happened in the same timeframe that Synopsys
did the Intel "primary EDA supplier" deal.

In addition, during last week's SNPS Q3/07 conference call Jay Vleeschhouwer
of Merrill Lynch heavily hinted that this Intel deal was something like 4 or
5 years -- NOT the usual 3 year EDA deal.

Rounding $129.9 to $130, the corners are:

                $130 million * 4 years = $520 million baseline
               + $50 million * 4 years = $200 million gravy

              $130 million * 4.5 years = $585 million baseline
             + $50 million * 4.5 years = $225 million gravy

                $130 million * 5 years = $650 million baseline
               + $50 million * 5 years = $250 million gravy

So 4-4.5-5 years totals to either $720 million, $810 million, $900 million;
with $200 million, $225 million, $250 million of it being gravy new sales!

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A crude way to check this estimate of the Intel deal is from the Synopsys Q3
FY2007 Conference Call Transcript:

  "From an orders perspective, we had by far the largest quarter ever,
   with a book-to-bill of well over 2."

That quarter's "bill" (revenue) was $304.1 million, using this book-to-bill
number, the total new business bookings from the Intel deal ranged from:

     2.1 * $304.1 million = $638.6 million = bottom est of new bookings
     2.5 * $304.1 million = $760.3 million = middle est of new bookings
     2.9 * $304.1 million = $881.9 million = top est of new bookings

Ignoring all the detailed accounting that's required to clean this up, that
$760.3 million in surplus Synopsys orders roughly matches in ballpark terms
to my earlier $720 million to $900 million estimate!  Not bad.  Even if my
analysis is completely out-to-lunch, it's interesting to see that it fit
within this crude check.

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An odd sidebar to all this Intel-Synopsys estimating is that you can also
use the facts that since Freescale is ~1/7th the size of Intel plus Cadence
is similar to Synopsys; with Synopsys baselining $129.9 million from Intel,
Cadence probably ballparks $130 / 7 = $19 million per year from Freescale.

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So anyway, in a nutshell, Andy, I don't think this endorsement *turns* into
new dollars for Aart; I think it *is* new dollars for Aart.  1/4 billion to
be specific.  Intel just won't let Aart say it plainly in public.  :)

    - John Cooley
      DeepChip.com                               Holliston, MA