Cadence Design Systems, Inc. (CDNS) Bank of America Merrill Lynch Global Technology Conference May 08, 2012 05:45 pm ET Executives Geoff Ribar - SVP & CFO Analysts Presentation [Abrupt Start] Unidentified Analyst
We support the industry that you all are very aware of. I have been in the semiconductor business or the EDA business for 30 years, coming up. Since maybe the early 80s when the PC business first really started taking out, I find that this is the most exciting time as people use of electronics is dramatically changing.The rise of mobility I think has been the major trend. You see people using mobility and using things that they never used before. My kids never carry a watch anymore, they carry a cell phone. They don’t watch TV anymore, they watch their computer. I think that growth and that drive in the industry trend is actually very interesting. Again, I think there is a lot of (inaudible). I think we are actually moving through the fifth wave of computing where first wave was mainframes, then micros, then minis, then PCs and now I think mobility is really driving that. We’re the industry leader in our particular space and I’ll talk more about that later. We have a ratable business model which means we recognize revenue overtime, not upfront, largely; high and sustainable possibilities with software business with a very nice model and we have very strong cash flow. So a little bit about the overall trends; I think the key trend that’s really driving our customers is mobility. People are now taking essentially their PCs with them, their PCs, their organizers, their communication devices with them. That’s driving all the rest of these. Apps, obviously has been a key driver and so for the complex software apps allow you to do simple functions in a way you want to do them. The other side of mobility is of course the cloud. Obviously, you are well aware of the rise of the data centers and the people buy data center services. That’s also what’s clearly driving our business.
And video has become one of the key applications that people are using. That’s obviously driving the clouds and network infrastructure. And then lastly power has become very key; I have IT in my organization and frankly the utility bills for one in our data centers is one of major plus for us. Imagine multiplying that by thousands and you come up with them actually so what they are trying to do, so green tech is clearly driving. So all these trends, but they are all really based in mobility, I think are really driving changes in the business.And semiconductors is the heart of all this. There is settlement device or settlement industry these days that’s rapidly growing that isn’t dependent on the semiconductors. From Facebook to PC, to tablets to Apple they are all dependent very much on semiconductors and it’s the key to what their business is and that’s clearly driving our business. And the difference between system companies and chips companies are largely changing pretty dramatically overtime. It used to be that system companies largely brought standard chips of the shelf and then integrated them together to create a device. Now the system companies are really driving back those designs back into the chip companies and saying here is what I want in the chip. Practically examples are Apple or Google or those types of things where they are actually driving requirements back in. What this mean to us is both types of these customers become customer for ours. And the cost of developing chips have gone up materially. This is rough trend for where we expect the cost of developing companies to be, again I spend my whole life on the chip side, I was NVIDIA’s first CFO; I was CFO at SiRF, Corporate Controller at AMD. I can tell you these costs are pretty real and they are going up pretty dramatically overall in long periods of time. So the key thing is, what does this means for the industry and how is Cadence addressing them. Read the rest of this transcript for free on seekingalpha.com