Parametric Technology Is on a Roll

NEEDHAM, Mass. (TheStreet) -- It may surprise some to learn that software for product design and manufacturing is one of the largest stand-alone software segments.

And while you may not have heard of Parametric Technology(PMTC), it happens to be the third largest vendor in this category of software, with annual sales approaching $1 billion and a global market share of roughly 18%.

Parametric has been on a roll with its software for product collaboration, which it calls Windchill.

The company's products appeal to a big market. A wide range of electronics, aerospace, heavy machinery, consumer product, automotive and medical device companies spend about $5.5 billion annually on software for product design and manufacturing.

This makes sense, because companies in these industries remain under pressure to speed up the time it takes to get products to market, reduce costs and improve product quality.

Parametric's primary competitors are France-based Dassault Systemes and Siemens'(SI) PLM Software division.

In a nutshell, Parametric's Windchill product allows engineers, product designers, and manufacturing personnel to work in teams to create new products and communicate around the globe.

The company's recent Windchill wins at Nokia(NOK), Volvo, Otis Elevator, Lenovo (LNVGY.PK) (the former PC division of IBM(IBM)), GE's Medical Systems division and Cummins(CMI) bode well for the company as it enters 2010.

Parametric's product sales growth rebounded very nicely, up 48% year over year in the quarter ended Dec. 31. The company's gross margin rose from 66% a year ago to 71%, attesting to the rebound in product sales.

In particular, the company's Windchill product collaboration suite had a strong quarter, with major victories at GE Medical Systems and Cummins, both of which chose to switch over from existing collaboration systems.