Et Tu, Autodesk?

Issue #985

 

by Ralph Grabowski with Martyn Day The ceo of Stratasys resigned last month. The press release that reported the event was written in a neutral fashion. It gave no reason for the change at the top, but it did thank the outgoing ceo. Stratasys makes industrial-grade 3D printers, and owns the MakerBot and GrabCAD brands. The announcement was made weeks after the company reported lower income than last year, and losses for the first three months of 2018 that followed losses in the previous years: First Quarter Revenue decreased 6% to $153.8 million compared to same period last year First Quarter GAAP net loss of $13.0 million Nor had SSYS's share price followed the stock market's exuberance of the last few years. It is down 7x from its 2013 peak. (See figure 1.) Figure 1: SYSS share price over five years Writers who specialize in reporting on the 3D printing industry have speculated that the ceo was let go because he failed to stem the ongoing financial losses.   Activists Reign At Autodesk A second company in our CAD/CAM industry lost its ceo over on-going losses: software rental firm Autodesk.  A couple of years ago, activist investors purchased sufficient ADSK shares to force Autodesk's directors to nominate three of them to the board. The board gives direction to the company's operation, and companies have rules on how someone gets into these important and well-paid positions. Most board members are appointed due to their connections in the corporate world, but bylaws typically allow large shareholders to also get onboard. Activist investors are pure capitalists: their primary concern is to maximize profits to the benefit of the shareholders, never mind the social consequences. Their actions can improve the operations of corporations, but it can also destroy them (c.f. Black & Decker). In the minds of activists, Autodesk was not generating as much profit as it should be. With the activists on board, there seemed to be no change to the company, initially -- until, however, when 23% of Autodesk's employees last year lost their livelihoods . Further, the company announced that then-ceo Carl Bass would step down. The rumor at the time hinted that his resignation was part of a compromise that saw two of the three activists resign at the same time. No replacement ceo was announced, indicating the resignation may have been abrupt. (Corporations are keen to sooth shareholders with smooth ceo handovers.) The board chose instead to install two temporary ceos, former vice presidents Andrew Anagnost and Amar Hanspal, until a new one could be appointed. Last June, Mr Anagnost last June won, with Mr Hanspal immediately quitting the company.  (Laid-off Autodesk employees with prominent names popped up at competitors, who received them eagerly and, in some cases, gratefully. Former co-ceo Mr Hanspal heads a new robotics company with a familiar-sounding name, AutoLab AI, with Mr Bass as one of its directors; see bizjournals.com/sanjose/news/2018/05/30/the-funded-a-stealthy-flex-spinoff-an-ipo-filing.html; h/t Steve Johnson.)   Activists Reign, Part Deux The pattern, this year, repeats itself. Mr Anagnost presides over red ink totaling nearly $2 billion, due to the company's dive into forced subscriptions -- for which the new ceo had been the primary spokesman. Activist investors are again buying up shares. One supposes the activists feel Autodesk is in need of a second shakeup, and not just because it is nearly three years in the red. There are other financial metrics that concern financial analysts. Guru Focus, for instance, warns that it has detected these warning signs: Revenue per share have been declining for past five years Financial strength is 4 out of 10 Debt-to-equity ratio is under performing a majority of Autodesk's competitors Poor earnings quality Other analysts report more concerns over Autodesk: Piotroski F-Score: one star out of five for business predictability Altman Z-Score: profitability and growth score of 5 of 10, with an operating margin that under performs 82% of Autodesk's competitors Peter Lynch: ADSK stock is trading significantly higher than its fair value -- at or near an all-time high of $139 (see figure 2) Figure 2: ADSK share price over the last five years The new activist investor is Jana Partners, who, as of May 15, owned 4.73% of ADSK shares. The amount is sufficient to force the Autodesk board to accept a Jana-nominated director. See gurufocus.com/news/682994/jana-partners-top-5-buys-of-1st-quarter; h/t Martyn Day.   What This Means for Autodesk AEC Magazine consulting editor Martyn Day summarizes on what this means for Autodesk: "Active investors cause problems, as with enough shares they can get seats on the board to push for layoffs to improve operating margin and profitability, which adds value to shareholders. As the value of the stock rises, it increases the revenue-to-share earnings ratio.  "Autodesk’s previous ceo suffered similar boardroom fights, with demands for staff layoffs, which happened, although significantly fewer than the active investors wanted. That battle ended with Bass stepping down, so long as the active investors gave up their board seats.   "Who knows what happens next. The new active investors could even suggest Autodesk divest itself of less-profitable segments, such as Media and Entertainment, which has failed to be mentioned in Anagnost’s investor calls, leaving the focus firmly on manufacturing and AEC." Mr Anagnost had pleaded to non-subscribers to give him one year to prove the value of paying annually. The year was up last month, and the company still has two million mutinous users outside its fold. The company did add value to holding a subscription, but what was added -- such as generative design -- is not necessarily what users value. Worse, some of the subscription extras require extra subscriptions through surcharges called tokens, whose pricing is vague, variable, and expires after 12 months when not used up.  There are suggestions that Mr Anagnost's plan is to be ceo for four more years. If so, the board will resume its search soon, while the patience of activists may not stretch out that long. www.autodesk.com . MOBILE CAD for Android and iOS   ARES Touch offers 150+ CAD features to read, modify, and annotate DWG drawings on tablets and smartphones. Visit www.graebert.com/arestouch to learn more. Viewing and measuring features of ARES Touch are FREE for all users. ARES subscribers gain premium features like editing and photo annotation. Get a free 30-day trial of ARES Touch's premium features when you activate your free trial of ARES Commander at  www.graebert.com/arescommander  The Rest of the News Some of the most recent posts on my WorldCAD Access blog: Analysis: Al Dean explains why Autodesk running generative design in the cloud is wrong Review: This One Flaw Dooms the Aurga (Updated) - - - PTC sells 8.4% (with 10.6 million newly issued shares) of itself to Rockwell for $999.8 million, a surprise move given ceo James Heppelmann previously touting of how much GE loves PTC for its IoT [Internet of things] technology. Rockwell ceo Blake Moret gets a seat at the PTC board of directors table.  - - - Bricsys posts the schedule for its two-day London conference (Oct 23-24) at bricsys.com/en-intl/conference/schedule/  - - - Solidworks loses its vp of product portfolio management Kishore Boyalakuntla to 3D printing company Rize. rize3d.com/news/rize-appoints-kishore-boyalakuntla-vice-president-product - - - Nüsing uses cloudCAD ARES Kudo from Graebert for its customized movable wall technology. Read more on the corporate blog at https://www.graebert.com/blog/general-news/nusing-ares-kudo-cloud/ - - - Inkjet printers can create kind-of 3D prints, called "Dimensional Printing." Canon's Océ-banded Arizona UV flatbed printers print multiple layers of ink to produce effects like woodgrain, embossed type, and braille. The new Oce Touchstone software automates dimensional printing on Arizona 1260, 1280, and 2200 printers. csa.canon.com/online/portal/csa/csa/products/software/softwaredetail/Software/oce-touchstone-dimensional-printing-software - - - Corel ships CorelDRAW Technical Suite 2018 with these features: Enhances commands for technical drawing and photo editing Fits objects along a path (see figure below) Draws symmetrically Boosts performance More info from https://www.coreldraw.com/en/product/technical-suite/ - - - Hexagon acquires SPRING Technologies, which makes machine tool simulation and verification software -- as soon as regulatory approval is obtained. - - - "The Internet and computing giants -- the heaviest users of open source in the world -- are collectively worth trillions of dollars, but you would be remiss in thinking that their wealth has somehow trickled down to the maintainers of the open source projects that power them." -- techcrunch.com - - - progeCAD USA releases progeCAD 2019 Professional, an AutoCAD-replacement package that adds the following functions: New formats for transfer from and into other CAD, CAM and 3D modeling applications Automatically creates surface profiles Terrain slope lines And more. See http://download.progecad.us  - - - The latest update to PDF3D is v2.16 offers... Large mesh texture-image handling  Panoramic scenes CAD format conversion improvements  Engineering analysis result workflows  WebGL export  More info here -> pdf3d.com/pdf3d-version-2-16-focuses-on-cad-cae-panoramic-360-and-engineering/ - - -   Applied Software updates eVolve 2.0 for Revit to improve electrical prefab deliverables with... Support for 2019 edition of Revit 87 new families System family conduit workflow  Export to Excel  More at www.asti.com/products/evolve/ - - - "The 10-millionth US Patent to be signed today by Pres Trump: 'Coherent Ladar Using Intra-Pixel Quadrature Detection.' Just as you thought. "Has applications in autonomous vehicles, medical imaging, military defense systems, space and undersea exploration. https://10millionpatents.uspto.gov/docs/patent10million.pdf"-- Mark Knoller, CBS white house correspondent - - - Open Design Alliance releases a trio of updates for its Teigha series of APIs: 1. Teigha Drawings 2019 adds PDF import and visualization to the SDK 2. Teigha BIM 2019 gets view-specific element graphics 3. Teigha Civil 2019 visualizes superelevations, building sites, pressure pipes, etc; supports 2019 Civil 3D files Available to members only, with more information at https://www.opendesign.com/products - - - Here's the reason the Internet no longer routes around censorship: an oligopoly of cloud host sites, content delivery networks, and app stores would rather lose a customer (like Telegram) than be blocked wholesale from an entire region, such as Russia. Corporations like Amazon, Google, Apple, Microsoft, and Cloudflare tilt the censorship/freedom balance in favor of censorship just by being pervasive. Learn more from https://www.schneier.com/blog/archives/2018/06/russian_censors.html - - - C3D Labs chalks up a conversion win with Tera Analysis of Denmark swapping out the Open Cascade kernel from its QuickField simulation software for C3D Toolkit. Details and reasons at c3dlabs.com/en/news/items/?news=2734 - - - 3DRepo identifies clashes in construction plans by analyzing 3D models with its 3D Diff Web-based software. The clash detection highlights  exact intersection points, exports the results in BCF format, and even works for models from different sources. www.3drepo.io/  - - - For late-breaking CAD news, follow upFront.eZine on Twitter at @upfrontezine. Letters to the Editor Re: Why Generative Design in the Cloud is Wrong Al's right [in Al Dean explains why Autodesk running generative design in the cloud is wrong]. It's not only going to discourage people from experimenting with designs once they've established that workflow, it's also going to discourage people from doing the experimentation required to establish the workflow in the first place.       - Steve Johnson (via WorldCAD Access)   Thank You, Readers! Thank you to readers who donate towards the operation of upFront.eZine: Malcolm Davis of Techevate Software: "Ralph, keep up the great work."  Open Design Alliance (small company donation) Should you wish to support upFront.eZine through PayPal, then the suggested amounts are like these: $25 for individuals > paypal.me/upfrontezine/25 $150 for small companies > paypal.me/upfrontezine/150 $750 for for large companies > paypal.me/upfrontezine/750 Should Paypal.me not operate in your country, then please use www.paypal.com and the account of grabowski@telus.net. Or mail a cheque (US$ or CDN$ only, please) to upFront.eZine Publishing, Ltd., 34486 Donlyn Avenue, Abbotsford BC, V2S 4W7, Canada.   Notable Quotable "Everyday life needs very little help from 'AI', you'll be amazed to discover."     - Andrew Orlowski     www.theregister.co.uk/2017/12/05/huawei_mate_10_pro/

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