Leading electronic design automation (EDA) company Synopsys, Inc. (SNPS) recently declared the completion of its acquisition of CoWare, Inc., which is also in the business of selling software and services for electronic systems design.
The company expects this acquisition to augment its portfolio of design and verification products, particularly for wireless, consumer and automotive design. We also expect the newly acquired technology to help Synopsys to deliver solutions based on open interoperability standards.
Synopsys declared the initial acquisition news about a month back, but did not disclose pecuniary details of the deal. Even after the completion of this deal, there is no clarification from the company about the monetary involvement in the acquisition.
This apart, the recent findings of the research firm AMI-Partners suggest that the enterprise software market will witness an upsurge in spending by small-to-midsize businesses (SMBs) this year. In fact, the research firm expects spending to go up to a 6% compound annual growth rate (CAGR) over the next five years.
SMBs have set aside a good IT spending budget this year and by 2013, this segment will push up demand for application software and services to $35 billion. This is good news for Synopsys, as the company deals with some software products as well.
Synopsys reported mediocre results in the fourth quarter. The company delivered an EPS of 33 cents, beating the Zacks Consensus Estimate by 7 cents, while revenue of $338.3 million tumbled 4.1% compared to the year-ago quarter. The revenue decline may be attributed to the decline in both License revenue and Maintenance & Service revenue.
The company has provided a decent guidance for the first quarter and fiscal year 2010. It expects revenue in the range of $325 million − $333 million for the year, which we believe is achievable, given the revival in demand for electronic goods and software.
The Zacks Consensus Estimate is for Synopsys to earn $1.34 in fiscal year 2010, an increase of 4.7% from 2009 levels. Analysts, by and large, are continuing with their earlier numbers, as there is only one upward revision and no downward estimate revisions in the last month.
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