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Archive for February, 2011

What Kakalios Got Right?

Wednesday, February 23rd, 2011

Here’s a great piece by a superhero in physics – succinct, clever and even a bit funny.

What Science Fiction Got Wrong? by Jim Kakalios

Schrödinger equation – Don’t enter a quantum state without it!

Icahn Offers $17/share for Mentor Graphic

Tuesday, February 22nd, 2011

Gary Dare just brought this to my attention: 

Investor offers to buy Mentor Graphic at $17/share

BUT WAIT! I’d suggest reading the last part of this article first, namely:

“The disclosure of the Icahn bid for Mentor comes only four days after his $665 million offer for the Texas power company Dynegy Inc. failed to get sufficient support from Dynegy shareholders and was terminated.”

I’m sure Icahn has more tricks – and turmoil – up his sleve for Mentor. All in the name of sharehold value.

President’s Trip to Intel

Friday, February 18th, 2011

Background on the President’s Trip to Intel and Investments in Education

This Friday, the President will travel to Hillsboro, Oregon and visit Intel Corporation where he will tour the world’s most advanced semiconductor manufacturing facility with Intel CEO Paul Otellini. The President will also learn more about Intel’s STEM (Science, Technology, Engineering and Math) education programs and Intel’s efforts to better prepare people to compete for high-tech jobs and be the minds behind the next great inventions.† He will then make remarks about the importance of out-educating the competition in order to win the future.¬† As he laid out in his State of the Union address and in the Fiscal Year 2012 budget released this week, President Obama believes that in order to win the future for this generation and the next, we must win the race to educate our kids.¬† His plan calls for key investments in education to grow the economy and create the jobs and industries of the future by doing what America does best ‚Äì investing in the creativity and imagination of our people. Intel has committed to investing more than $6 billion in their U.S.-based manufacturing facilities to support future technology advancements in Arizona and Oregon, creating more than 6,000 construction jobs and more than 800 permanent high-tech jobs. The President’s remarks will also be streamed live at www.WhiteHouse.gov/Live.

The Administration has made important strides in achieving President Obama’s goal of challenging the status quo in education and driving forward reform in our nation’s schools. Today’s economy demands a workforce that is smart, skilled, creative and equipped for success in a global marketplace. Building on the success of Race to the Top, he is calling on Congress to re-define and right-size the federal role in education, by replacing No Child Left Behind with a new law that raises expectations, challenges failure, rewards success, and provides greater flexibility for schools to innovate and improve results for their students. The President is also pledging to prepare an additional 100,000 science, technology, engineering, and math teachers by the end of the decade. To help restore America’s global leadership in higher education, the President will continue efforts to strengthen the Pell Grant program and is calling on Congress to make permanent his American Opportunity Tax Credit, worth $10,000 for four years of college.

Companies like Intel are helping us achieve these important education and innovation goals. They know that government and industry must work together so that America can out-educate, out-build, and out-innovate the rest of world.   Over the past decade, Intel and the Intel Foundation have invested more than $1 billion toward improving education.  In 2010, in conjunction with President Obama’s Educate to Innovate campaign, Intel announced a 10-year, $200 million commitment to advance education in math and science in the U.S. Intel is also one of four founding companies of Change the Equation, a CEO-led initiative designed to answer the president’s call to move the U.S. to the top in science and math education over the next decade.

Icahn Seeks Mentor’s Acquisition or Sell-off

Wednesday, February 9th, 2011

Activist investor Carl Icahn has been very quiet about his reasons for acquiring more and more interest in EDA company Mentor Graphics. That silence has now been replaced with an appearance on CNBC where he and a fellow investor have called for the acquisition or sell-off of the EDA company.

Why generate such attention now? Icahn claims his actions are triggered by Mentor’s sudden change in the date of its annual investor meeting. This means that Icahn has less time to nominate his supporters for election to the company’s board.

Icahn claims that Mentor’s current management is unfit to run the company in part because Mentor’s Selling, General and Administrative (SG&A) costs as a percent of revenue are much higher than the competition – by which Icahn seems to mean Synopsys. The numbers do support this claim with Mentor’s SG&A at about 49 percent and Synopsys’s SG&A at roughly 32%.

But the comparison is a dubious one, at best. In terms of total revenue, Mentor is far closer to Cadence Design Systems than Synopsys. When stacked against a similar competitor like Cadence, Mentor’s SG&A is right in line.

There are several other differences between the two major EDA companies which Icahn and his colleagues choose to ignore. One area of difference is the way Mentor and Synopsys report revenue and bookings, which affects swings in the stock prices. Another difference lies in the basic structure of the two companies. Some have suggested that Mentor’s structure allows the various divisions to have greater freedom to explore and profit from new ventures. Typically, such freedom comes at the price of duplication of some selling, marketing and administrative costs.

But do Carl Icahn and his fellow activist investor, Donald Drapkin of Casablanca Capital, really have legitimate concerns about Mentor’s value to all its investors? After the US has suffered through the last 3 years of near financial collapse caused in large measure by banker and investor recklessness, many technical professional wonder if these concerns are driven more by profit seeking than long-term value for the investment community as a whole.

Would the EDA industry be better served by the disruption caused by yet another acquisition attempt on Mentor or a sell off? (Recall attempts by Cadence (2008) and Cidadel Financial Group (2006) – see below.) EDA companies are in a market that is difficult for business investors to understand. The industry itself is morphing into a new form, as evidenced by the increasing pace of acquisition and the shrinking pool of new start-ups. To meet the global shift to high-volume, low-priced and low-power consumer market, EDA is evolving from a collection of optimized sub-system companies to an ecosystem of tightly integrated system players.

This is a delicate time for the EDA space. The last thing that is needed is a replay of the Wall Street’s recklessness that destroyed an economy while benefiting a select few.

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