SAN FRANCISO— The stock price of EDA vendor Magma Design Automation Inc. continues to hover near an all-time low following last month's surprise, when the company cut revenue guidance for the current fiscal year by about 30 percent.
Magma's stock closed at $4.63 per share Tuesday (Sept. 9) after bottoming out during Nasdaq trading Friday at $4.41, the lowest point for Magma's stock since the company went public in 2001. Magma's stock price is down more than 60 percent year-to-date.
The slide has been steady, but Magma's stock has plumbed historic lows since Aug. 28, when the company cut its revenue guidance for the current fiscal year from $225-$230 million down to $158-$160 million.
Magma, the fourth-ranked EDA vendor by market share, is not the only tool provider facing hard times. Of the top four players in the market, only Synopsys Inc. posted a profit in its most recently completed fiscal quarter. Market leader Cadence Design Systems Inc. saw its own stock price drop to its lowest point in more than a decade after cutting its fiscal year guidance in July from $1.49-$1.54 billion to $1.12-$1.14 billion.
According to Gary Smith, founder and chief analyst for Gary Smith EDA, all EDA vendors are being challenged by design-tool budget cuts at semiconductor firms. "The [semiconductor] companies that are in trouble are not spending money on EDA tools this year," Smith said.
"The biggest shift is most customers used to be willing to invest in product ahead of demand," Roy Jewell, Magma's president and chief operating officer, told analysts on Magma's quarterly earnings call last month. "Most of them aren't doing that right now."
In a subsequent interview with EE Times, Jewell described customers' EDA spending as more "deliberate," saying chip companies are more reluctant to commit because of their own limited visibility. Once chip companies have a better sense of where their own business is headed, they are likely to return to the more traditional behavior of acquiring tool capacity ahead of demand, Jewell said.
