t h e  b u s i n e s s  o f  c a d


Issue #720 |  January 31, 2012
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In This Issue


1. PTC Faces 2012 with Cuts, Reorganization


2. From the PTC Q1 Earnings Call Transcript


3. Out of the Inbox, and other regular columns.

PTC Faces 2012 with Cuts, Reorganization

The PMTC share price jumped on the good news that Q1 revenues were up 20% over a year earlier: $319.8 million. After delivering 25% EPS in 2010 and 26% in 2011, PTC ceo James Heppelmann is promising shareholders a 27% EPS [earnings per share] growth rate through 2015.


"Knowing that our margins are trailing many of our peers, starting last summer we performed a deep-dive analysis on our profitability situation," explained Mr Heppelmann. "And we concluded that, structurally, PTC should be able to achieve operating margins in the upper 20s [up by ten points], similar to our peer companies."


The catch: besides growing revenues, the company will cut costs in Q2, which it calls "capturing efficiencies." PTC employees heard the unhappy news that about 180 of them will be losing their jobs. As best as I can figure it out, those persons who might be out of work are in sales, services, R&D, and marketing. For instance, when a customer uses several pieces of PTC software, then typically there was one salesmen attached to each piece; PTC now wants one salesman per client.


The bad news: CAD license revenue fell 1% from a year earlier, reflecting the lower prices of the many Creo modules, as compared with the traditional Pro/E bundle.


PTC is restructuring itself from business units structured around CAD, PLM, and acquired software, to five market sectors:

"For maximum efficiency, we'd like to share technology, as well as sales and services resources across all five market sectors," he explained. To me, it looks like he is primarily fighting Dassault Systemes with this new structure.


In Q2, PTC expects revenues in the range of $305-$320 million; for the year, $1.3 billion. The company has $187 million cash in the bank.




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From the PTC Q1 Earnings Call Transcript

PTC's earnings calls with financial analysts are no longer as brash as when Richard Harrison was CEO, but nevertheless we can glean some insight into what's happening from the current ceo, James Heppelmann.


On Creo:

"We acquired CoCreate, and then blended that together with Pro/ENGINEER into this concept called Creo. We now have a much broader product suite that appeals to many more casual users. ...Our sales of direct modeling seats have skyrocketed. Now that's sort of a less sophisticated system typically sold to a more casual users at a lower price point."


"...We've been moving to implement this annual plan [of annual releases of Creo and Windchill], and it's more or less on track."

On the highly-lauded relationship with HKMC (Hyundai-Kia Motor Company):

"We did not get a significant software order upfront. We had one, but it was not significant. So now there will be an opportunity to add a lot of users to this Phase 1 system, and then simultaneously, we're also negotiating the Phase 2."


On modern automobiles getting more electronics:

"An average luxury automobile has as many lines of code in it as PTC has across all our product suite. They're very complex software devices at this point, and a lot of that's developed by suppliers, so there's a supply chain element to it. There's a huge quality discussion, as well as systems engineering discussion, over how to actually design a strategy for the integration of hardware and software into an operating vehicle that meets the customer requirements."


On sales in China:

"I think in general, there's been a modest slowing of growth in China in the last 12 to 18 months."


On the upcoming reorg:

"Today, the business units we have are quite deep. They have their full dedicated sales, full dedicated service, full dedicated R&D. That's the as-was model. And so what we're trying to do is two things. [1] We're trying to make the business units thinner, so it is really more of a matrix than an operation, because we think that's going to be much more efficient. And then [2] the second thing we're trying to do is make sure that the two biggest businesses we have, CAD and PLM, also have a business unit. So we're restructuring the depth of these business units and also the coverage."


On the upcoming cuts:

"Now we have two sales reps working on one deal, which means there's sort of overlap of quota. When we get the one deal, both reps are happy, but I'm not, because I have two reps that landed one deal."


"The greatest efficiencies over time will be achieved in the services piece. Along with sales, I would expect the marketing, which will continue roughly at the rate it is. R&D, we guided to the 16%, 17% range, which is down from 19% a year or so ago. ...We didn't impact, per se, any particular function necessarily more than others. It pretty much was across the board."






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We know data translation, and provide immaculate developer-to-customer relations. http://www.okino.com


Out of the Inbox

It's first, as best as I can tell. CADCIM Technologies ships 'Creo Parametric 1.0 for Designers' textbook for creating solid and surface models. $55 and 816 pages. http://cadcim.com/ProductDetails.aspx?ISBN=978-1-936646-12-8


Despite the (hopefully now finished) war between ITC and CADopia, CADopia is now shipping the ARES-based CADopia 12 with smart dimensions, print configurations, support for 3D mice, and more. http://www.cadopia.com/about_us/news/cadopia12.asp

David Gill writes to tell us that nPower Software's new Power ScanToNURBS "imports scanned meshes into 3ds Max, and converts them into a NURBS format that can be exported to various CAD systems or rapid prototyping machines." http://www.npowersoftware.com/pressreleases/pressreleasepowerscantonurbs.html


The guys behind TTF (which was bought by Adobe, who then lost interest) now call themselves TFTLabs. Their new Web-based TFTWeb is meant to communicate and collaborate with 3D data on most operating systems and most Web browsers. It works directly on data from 20+ native and generic CAD formats. http://www.tftlabs.com

In other translation news, CCE's ODX libraries are updated to read NX 8 files. http://www.cadcam-e.com


Oops, we're not done yet: ITI TranscenData adds a native Inventor interface in its Proficiency Collaboration Gateway software that transfers "complete design intelligence between major CAD systems" including: geometry, features, sketches, manufacturing info, metadata, assembly information, and drawings. http://www.proficiency.com


The 3D PDF Consortium is now formally incorporated. It's a group of vendors, integrators, developers, and users who want to keep 3D PDF going after, as noted above, Adobe lost interest in the CAD market. http://www.3DPDFConsortium.org


Probably not of much interest to readers as it is to we editors that Siemens PLM System has hired Waggener Edstrom Worldwide to help in dealing with the CAD media.


Congratulations to Richard Morley for being on IndustryWeek's 2011 Manufacturing Hall of Fame for inventing the programmable controller -- "perhaps one of the most important technological developments in the history of manufacturing." http://www.industryweek.com/PrintArticle.aspx?ArticleID=26170


And finally, Zuken EAS appoints Steve Chidester as head of international marketing; Patrick Hackney as senior technical marketing manager; and Aurang Rona as international corporate development manager.


On the Twitter stream

@bricsys (Bricsys): Bricsys started 10 years ago. A decade of CAD.


ralphg (Ralph Grabowski): "Inventor Fusion is used by mechanical engineers to design cars & planes & factory assembly lines." - AllThingsD http://allthingsd.com/20120126/autodesk-is-all-smiles-with-its-mac-software-business/


@ralphg (Ralph Grabowski): An earlier version of AllThingsD blog wrote, "Inventor Fusion...[is] heavy-duty software, and on Windows, it costs $3,500."


@cadtoolbox (Thomas Rambach): Going to be interesting to see how this all plays out at GrabCAD, especially in the wake of all the SOPA mess -- http://www.dezignstuff.com/blog/?p=6986#comments

On the WorldCAD Access blog

These were some of the news items that were posted during the last week at our WorldCAD Access blog <worldcadaccess.typepad.com>:


Letters to the Editor


Re: 30-storey building built in 15 days

"Not bad. Here's another one that was built quickly: 'The Hilton hotel in San Antonio, Texas (close to the famous RiverWalk) was built in 42 days. Each room was prefabricated off-site, complete with plumbing, drapes, and furniture. Housekeeping then made up each room, including bedding, towels, soap, toilet paper, and Gideons' Bible. The rooms were trucked to the site and hoisted into place. The hotel was open for business within an hour of the last room being installed.'
     - Bill Fane


Re: New Webzine Launches

"A typo I presime?

"Tack: a course of action or method of approach intended to achieve something, especially one adopted after another has failed (originally only a sailing term for a change in the direction of movement of a sailing boat made in order to maximize the benefit from the wind.

"Tact: skill in situations in which other people's feelings have to be considered or an intuitive sense of what is right or appropriate."
     - Roger Piggott, building designer
       Jean Miller & Associates Pty Ltd


"Congrats on CADdigest.com! Like a legendary band getting together again for the first time. (I don't know what that actually means, but someone wrote that once about a bundled product we had and I thought it was clever."
      - Royal Farros, ceo


"I recently installed DraftSight for Linux. Strangely the download was 105MB instead of the 49MB that Windows uses. I wonder why.

"Most importantly, the program will NOT start unless there is an internet connection to the computer. I need it to run wherever I am, with or without internet access. I would assume it is contacting head office for some reason. I have registered it properly and have confirmation. Could there be serious privacy issue here?"
     - Mike


The editor replies: "The Windows download of the latest version is up to 68MB. It is my understanding that the Linux version contains additional code to make it compatible with the Windows version, code that Linux natively does not supply.


"The Windows version started up for me, after displaying a warning that it could not access the internet. As for privacy, well, you pretty much waive that all away by agreeing to the terms of any end user license these days."

"Thank you for all the advice and knowledge that I received from upFront.eZine for years. Keep your excellent job. Gracias."
      - Raúl S. González

Spin Doctor of the Moment

"We are not trying to make it so that people spend more time on Facebook. We are trying to make it so that the time that you spend on Facebook is so valuable that you want to come back every day."
     - Mark Zuckerberg



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Entire contents copyright 2012 by upFront.eZine Publishing, Ltd. All rights reserved worldwide. Letters sent to the editor are subject to publication. Article reprint fee: $250 and up. All trademarks belong to their respective holders. "upFront.eZine," "The Business of CAD," and "WorldCAD Access" are trademarks of upFront.eZine Publishing, Ltd. Letters to the editor may be edited for clarity and brevity. Translations and opinions expressed are not necessarily shared by upFront.eZine Publishing, Ltd.

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