As everyone pays attention to aircraft-maker marriages, back down on the ground
is building relationships that are making it a formidable presence in the computer-aided design (CAD) market.
Last Tuesday, Autodesk said it would buy
in a $72 million stock deal. Such a purchase, expected to close by next summer, would add to Autodesk's already formidable position in the CAD market. To some in the industry, the acquisition smacks of a
effort to gain de facto control of the CAD market from the standard software on up to task-specific applications.
(The story as first posted read: ". . . from the basic standard operating platform on up to higher-end software applications.")
Computer-aided design software is used to create designs and blueprints.
Autodesk, through its AutoCAD product, already has a stranglehold on CAD standards (similar to Microsoft's own Windows dominance). Meanwhile, Softdesk makes programs that optimize AutoCAD for the specific needs of architects and engineers (think of a Word application geared to this market).
"Autodesk wants to be a Microsoft," says Anthony Dean, an architect and
Parsons School of Design
instructor in New York. "They want to lock up the CAD market." Autodesk did not return a call for comment.
Despite the prospects of a powerful, integrated position in the CAD market, investors have largely sniffed at the deal. Autodesk shares have hovered around 27, little changed since the merger news. Softdesk rose from 9 1/4 to 9 3/4 on the news, and Tuesday closed at 10 3/8.
Even as Autodesk gets stronger, nimble companies continue to gain ground in the CAD market. At the low end,
Visio Technical has improved its market share. And privately held
Microstation has seen sales jump from $30 million in 1994 to $95 million in 1995.
Still, competitors of Softdesk have suffered in the wake of the Autodesk news.
Eagle Point Software
which competes with Softdesk in the AEC (architecture, engineering and construction) market, stumbled 29%. The reason: Investors don't want to get stuck with a Xywrite redux in the CAD-AEC world. David Farina, an analyst with Eagle Point underwriter
William Blair & Co.
, downgraded his rating of the company to hold from long-term buy the day after the merger. Eagle Point did not return a call for comment.
Based on Autodesk's improving market position, Hany Nada, an analyst with
(which hasn't underwritten the company), upgraded Autodesk to strong buy from buy. Besides the obvious "synergies," Nada points out that the acquisition should damp some of the revenue fluctuations attached to AutoCAD's sales. Traditionally, Autodesk's revenue, and share price, rises and falls with AutoCAD release cycles. Because Softdesk releases its AEC software a few months after AutoCAD, Autodesk may not have such a jittery ride. The next AutoCAD release is due out in the first half of 1997.
By Justin Lahart