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issue #550 : : march 11, 2008 |
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In this issue: - The Currency
Effect - The Currency Effect Out of the Inbox and the other regular columns. |
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Excerpts from the world's second-largest CAD software company's conference call with financial analysts:
The Currency Effect Total revenue for the quarter was e371 million euros, up 14% in constant currencies. With the dollar-Euro rates sometimes fluctuating by more than 1% a day, "constant currencies" has become a constant refrain for CAD companies -- whether located inside or outside the USA. That's because American exporters (like Autodesk) benefit from the cheap US$, while European (like Dassault) and Canadian (like me) exporters are hurting from the expensive Euro and Canadian dollar. Compared with a year or two ago, the Autodesks are making millions more, while the Dassaults are making millions less. The problem in reporting financial results is that importing and exporting firms exchange their income at fluctuating rates. As Dassault notes, "Frankly speaking, this was the worst year for currency since the 2002/2003 time frame. In 2007, the US dollar weakened by 9% and the Japanese yen by 10%." Yet, public companies report this thing called "constant currencies" -- constant to local currencies. So when Dassault reports, "In constant currencies, Asia revenues were up 24%, followed by the Americas which grew 19%, and Europe which was up by 7%", that's what happened in the regions, but not at head office. A little later in the call, Dassault reports how head office in France sees revenues after converting everything to Euros: "...excluding currency effects, Asia led the overall results, with total revenues up 22%, the Americas was up 10% and Europe was up 8%." Suddenly, growth in the Americas is halved, due to that weak US$ cutting into sales revenue. But then the call switches back to the localized growth rate: "We enjoyed strong growth in software – growing 16% excluding currency effects in the fourth quarter." What was the currency-effected rate of growth? 8.9%, nearly half as much. CEO Bernard Charles admits that the strong Euro makes his company look weaker against American companies, which are looking stronger from their weak dollar: "What I'd like to point out is that without currency movements, our EPS [earnings per share] growth would have been 19% [instead of 8%]. When comparing with our competitors which are US-based, they don't have a neutral currency. In fact they have a positive impact coming from currency. Had we been a US-based company, our EPS would have grown north of 19%, probably 23%, 24%."
SolidWorks Reseller Channel Another issue dogging Dassault is its "takeover" of the SolidWorks reseller channel. "Our third sales channel is the professional channel principally addressing the mainstream 3D market [SolidWorks], and now is a multibrand channel as it has started to sell [Dassault's] 3DVIA Composer [formerly Seemage]." What else might it sell? analysts wanted to know. SolidWorks resellers might also be dealing with PDMworks in the future, as well as all of Dassault's V6 (aka PLM 2.0) software, which Mr Charles describes as "a very large product portfolio."
In Other Financial News
www.3ds.com/corporate/investors/earnings Autodesk Q4 FY07 It was Autodesk's best quarter ever, but one day after the world's largest CAD software company lowered future revenue expectations, its share price fell by 15% ($6). Increasing revenues by 20% was not good enough. Hitting US$599 million in a single quarter -- also not good enough. Forecasting $575-$585 million for next quarter was the share price killer. For the stock market is not about, "What have you done for me?" but it's about "What can you promise me in the future, and then exceed that promise by more than by what I expect you will exceed it?" Run with the bulls, get gored by the bulls.
The Currency Effect Where Dassault suffers from the weak US$, Autodesk benefits. For example, EMEA [Europe, Middle East, Africa] was up 38% -- but up 27% in constant currencies. (The company notes that sales are shifting from USA to Asia.) Overall, Autodesk reports an extra $25 million due to favorable currency exchange rates, in just Q4. - - - Autodesk wishes it wouldn't but AutoCAD LT continues to outsell everything else, with sales up 33%. Seems there is quite a market for sub-$1000 CAD software. The company spent $49 million buying Robobot, Carmel Software, and Hanna Strategies. The company plans more acquisition, but notes that the field of possibilities is getting small: "You could sit there and on less than the fingers of one or two hands figure out all the ones there," notes CEO Carl Bass. The length of analyst Jay Vleeschhouwer's question is becoming a regular source of humour on these conference calls. At the end of a paragraph-long question, Mr Vleeschhouwer indicated he had a follow-up by conclusing, "That's question number one." "There were seven parts, if I counted correctly," responded Mr Bass. Autodesk expects revenues of about $2.4 billion for this fiscal year. One way the company plans to grow is through improved inter-operability between its software, as well as creating more variations on packages. The CIS/2 to VRML and IFC Translator v7.67 has instructions for converting CIS/2 files to SketchUp via IFC. No-charge download from ciks.cbt.nist.gov/cgi-bin/ctv/ctv_request.cgi Creaform launches VxScan v2 data acquisition software with improved automatic multiresolution and surface reconstruction. The 64-bit version removes memory limits. www.creaform3d.com SpaceClaim LT, the API-free version, now has its first third-party add-on, courtesy Robert McNeel & Assoc: 3DM lets LT directly read and write Rhino files. www.SpaceClaim.com General CADD Products pre-releases Surveyor 3D software with "Field to Finish," 3D surface creation, automatic placement of geo-registered USGS aerial images and topo maps, and more. Before 21 Mar, price is $99, plus the cost of General CADD (US$599); after that date, the price doubles. www.generalcadd.com/surveyor3d.htm TurboCAD 15 is now shipping from IMSI/design with Automatic Workplane by Face, Bill of Materials/Parts List, and a Green Library. Currently US$350 for the upgrade; $1295 list. www.turbocad.com Robust Decisions has a no-charge software-as-a-service application, Accord Instant Decision, for business decision-making. www.robustdecisions.com/instpd MecSoft releases VisualMILL 6.0 Professional with 3D offset pocketing and profiling, tool holder collision detection and processing, and more. www.mecsoft.com - - - These news items were posted during the last week at the WorldCAD Access blog < worldcadaccess.typepad.com>:
People/Companies on the Move Z Corp promotes executive vp of Sales, Marketing and Business Development John Kawola to CEO, replacing Tom Clay. SmartCAMcnc hires Terry Antrobus for the new position of International Business Development Director.
WorthWhile Web http://www.reghardware.co.uk/2008/03/10/ft_first_mp3_player/
Letters to the Editor "I don't know what others opinions are of EULAs [end user license agreements] that demand Internet access to your PC. It is alien to me to allow someone of unknown reliability or trustworthiness to have a chance at my proprietary information. "With the secrecy agreements I HAVE TO SIGN with my customers, what lawyer would not be able to sue me into oblivion for allowing a CAD company to venture into my computer files on whim or as a regular bit of spyware? "These EULAs force me to breach customer confidentiality laws and are, I am sure, a direct violation of our obligation to preserve customer data under Sarbanes-Oxley [legislation]. In essence, they are demanding I break the law to use their wonderful software. "With all the documented security lapses at major corporations, I just know CAD companies are clever enough to never lose my stuff. Aren't they? And of COURSE I trust them to never collect more than they say *cough cough* they will. "As an aside here, I am certain for one thing this is part of the future: if software companies could get away with it, a kill switch for lack of renewal fees. "I only buy software that (a) does not have to go online to activate; (b) does not have to go online for updates; (c) can be installed on a computer that no one outside my company has access to; and (d) I have a permanent license so that if I reach a point where I need no more upgrades I can let maintenance lapse and continue to use what I bought. "I downloaded the beta of Inventor LT, but got rid of it
in short order because of all the requests to go online. If vendors
expect to get past my firewall as a condition of use, I don't need
them and neither do my customers." The editor replies: "Kill switches already exist. I purchased one piece of software that won't reinstall if it is more than six months old. It forces me to download the latest version from the company Web site. Then I have to find my password, grumble, grumble..."
"I have a few thoughts on your interview with Rob Glasier: Rob is correct in stating that an airplane is not as complex as a ship or offshore rig. Typically, an airplane has approximately one million parts and an FPSO or even a nuclear plant would have approximately 10 million parts. However, building airplanes is still an extremely complex project and engineering task, and many lessons can be learned from it and applied to other industries. "In the last two to three years we have begun seeing owner/operators in Oil & Gas and Power Utilities looking at PLM and assessing what knowledge/experience they can leverage from industries such as aerospace. Implementing a PLM strategy helps them deal with more complex projects, constantly changing environments (e.g. lack of skilled people, global suppliers etc.) and rising costs. Looking at the entire business process, than rather just engineering and related data management issues, is becoming vital for their business. "I agree with Rob that MCAD vendors cannot deal with projects of the scale and complexity found in offshore and shipbuilding. Dassault Systemes has consequently developed an integrated CAD platform providing MCAD, Plant Design (Piping, intelligent P&ID, Structures, Electrical, HVAC and related schematics), and Shipbuilding capabilities on a single architecture, eliminating the need for many different, often unconnected systems. "In a PLM environment engineering data is shared with
the tools for Virtual Construction and Fabrication (Schedule integration,
Human Task definition, robotics etc.) and Maintainability Planning,
as well with the Enterprise Business Domain to manage all data and
related business processes, such as sourcing, suppliers, documents,
HR, finance, ECO in a portal dashboard type environment. In a nutshell,
a PLM environment can address product, process and resources in
an integrated fashion."
"I was surprised and amused by a comment in Issue #549, when you said: 'In my civil engineering classes, we would hollar out '6!' as the answer to any prof's question -- much to their annoyance.' "I assume you studied Civil Engineering in Canada? (I won’t be so presumptuous as to ask when.) I studied Civil Engineering at the University of Queensland (Australia) in the late 1970s. We too would call out '6' in response to any lecturer's question -- and yes, it annoyed them too! "I had no idea that '6' as a nonsense response had a multi-national range. Does anyone know if this practice is still current? Is it an engineering thing, or is it prevalent in other faculties as well? Or is it confined to only Civil Engineers? This looks like a subject that needs some serious research! "(As a post-script, we had one lecturer in Environmental
Engineering who always implored us to 'think logarithmically' whenever
we were dealing with very large or very small numbers. On one occasion,
he asked the class how many different species of insects there are
on Earth. '6!' came the predictable response from the back of the
lecture hall. 'Think logarithmically!' retorted the lecturer. 'Ten
to the sixth!' came the reply. 'Correct!' said the lecturer. It
turns out that there are estimated to be about one million species
of insects, 'to engineering precision'.) The editor replies: "Late 70s for me, too. Perhaps 42 was the wrong answer, and 6 the correct one! Other annoying tactics in our classes:
Mr Hardy responds: "Paper aeroplanes, that must be a universal behaviour pattern of engineering students. However, we did not resort to setting fire to them. (Can't imagine why, in retrospect -- it's not exactly as if we were little angels!) Our main pleasure was to water-bomb passing students and staff from our tutorial room windows."
Spin Doctor of the Moment "What's more, whereas competitors' forays into 3-D prototyping
were prohibitively expensive and hard to use, Inventor costs $5,300
and uses click-and-drag functionality that allows objects to be
changed, redrawn, and saved as easily as in a Word document."
Notable Quotable "Let's face it -- the biggest problem with the Semantic
Web is that it's as boring as dry toast."
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