Rahm S

1 Comment

    • Cadence Takes a Page Out of Microsoft’s Playbook [view article]
      On balance this merger is going to be mostly suboptimal to the end users, employees at both companies, the larger EDA community, and Cadence shareholders. The real beneficiaries of this merger will be Mentor shareholders and the institutions that finance this deal.

      EDA market is $5B+ supporting a $250B semiconductor market. And, it's growing albiet slowly at ~5% CAGR. In my opinion, that market size and growth should be able to support 3 or 4 large players.

      From an user perspective, the more choices they have the better the quality of products and services. This merger results in too many product overlaps and diminished product choices which is not going to help the end user.

      There will be retrenchment at the combined companies. Internal political battle will stranglehold development. And, the smart folks will simply run to an exit after the merger.

      From a larger EDA ecosystem -- EDA startups, which have been the perennial suppliers of new technology will now have one less exit opportunity given that an IPO is all but impossible these days. And, the VCs will be less enthused to invest in EDA startups.

      Mentor shareholders will receive a bump in their stock valuation, however I predict Cadence share price will continue to deteriorate since they will not be able to provide a whole lot of value with the merger (other than cost reduction) and Cadence will be unable to aggressively invest in R&D since they have to service the huge merger debt.

      Well, the only clear winners may be the financial institutions who finance this deal and the Mentor shareholders.
      Jun 18 01:52 PM
Loading...
Symbols:
Authors:
Quick Links:
Contribute an Article Become a Seeking Alpha Contributor

Transcripts

More Transcripts»