Mentor’s Final Sale

In the end, Paul Singer did what Carl Icahn couldn’t: Got Mentor sold.

Singer, the hedge fund manager known for taking large positions in companies and pushing for tough changes, breakups or sales, started accumulating shares of the EDA CAD company earlier this year. In September, it was revealed that his company Elliott Management, had bought up 8.1% of Mentor’s stock. Elliott immediately started lobbying for changes.

For Mentor, it could have seemed like a recurring bad dream. The company had been through this before, starting six years ago, when Carl Icahn, himself a famed corporate raider, began acquiring shares and issuing accusations of waste throughout the organization.

Icahn’s relationship with Mentor was public and acrimonious. Soon others joined the fray. Everything went under the microscope, from spending on marketing to the personal wealth of the directors. CEO Wally Rhines came under attack for pocketing $65 million from Mentor while the company generated only $113 million in free cash between 2001 and 2011. Icahn even offered to buy the company outright for $1.9 billion, a figure Mentor’s board dismissed as too low.

The board, however, couldn’t outright avoid Icahn and the others, who at their peak owned more than 20% of the company. Instead, they executed a “poison pill” amendment to its bylaws, making a hostile takeover more expensive and risky.

Icahn managed to land three directors on Mentor’s board but never affected the breakup or sale he had hoped for. Mentor bought back half his shares in February for $146 million, and he sold the last of his holdings in May.

Icahn certainly made a pile of money off Mentor. It took Singer, however, to fundamentally change the trajectory of the company.

Upon Elliott’s announcement, Mentor charted a different course. Instead of waging another attempt to fend off the barbarian at the gate, this time it signed on with Bank of America as an advisor to a possible sale. The deal with Siemens came quickly thereafter.

Singer’s stance was Mentor was undervalued by 20%. The price Siemens is paying — $4.5 billion — suggests even he was low.

Siemens was never a stretch as a suitor. As far back as 2011, we suggested the German conglomerate was one of a few companies that made sense to possibly acquire Mentor.

For some involved, the deal completes a circle. Mentor will become part of Siemens PLM, whose president Tony Hemmelgarn is a former Integraph executive. In fact, he was director of sales and marketing when the company spun off its Electronics Division into a wholly owned subsidiary known as VeriBest. Mentor then acquired VeriBest for $19 million in 1999.

It does spell the end to Mentor after 35 years as a standalone company. Founded by a trio of Tektronix engineers — Tom Bruggere, Gerry Langeler and Dave Moffenbeier — in 1981, Mentor added the PCB division through a merger with CADI in 1983. (Just after, Mentor hired the legendary John Cooper, who with partner David Chyan eventually developed the first shape-based router.)

In all likelihood this also means an end to Wally Rhines’ 23-year tenure as head of Mentor. He will be remembered as a steady leader during a period of great upheaval and M&A in EDA. On his watch, Mentor’s revenues grew from $340 million to nearly $1.2 billion. That’s a pretty darn good run.

Less clear is how the rest of the industry will react. Siemens gives Mentor exceptionally deep pockets, a buffer against meddling shareholders, and an extensive market for technology both as a customer and to partner with. The focus on “concept to system” just got a big boost.

By comparison, on the PCB side, the door has been slammed shut on one of the exit strategies for Cadence and Altium. Dassault has been rumored to be kicking the tires on Altium; this could trigger a move. Will PTC, which shares a Boston area neighborhood with Cadence, be compelled to act as well in order not to get shut out of ECAD? As one longtime industry observer noted to me recently, “It’s about the form factor.” OEMs want to design product in its entirety, not in silos of electrical, electronics, mechanical and wire harness. Given that, it’s a safe bet the M&A in ECAD won’t stop with this deal.

 

Mentor in Play

With Mentor stock being bought up by hedge funds (again) and the CAD company having gone so far as to enlist an outside banker to provide M&A advice, expect a lot more of this in coming months.

One thing to keep in mind: If Dassault or Siemens were to buy Mentor, what would that do for Altium and its owners’ exit strategy?

Changing of the EDA Guards

Turnover among the heads at the major suppliers of electronics design-related software is rare indeed. Since 2010, the top spot of a leading PCB software company has changed hands only once.

The dean of PCB EDA, Makoto Kaneko, founded Zuken in 1976. Wally Rhines has run Mentor Graphics since 1993. His counterpart at Cadence, Lip Bu Tan, has been in place since 2009.

Altium has had three chiefs in its existence, the most recent being Aram Mirkazemi, who was installed in 2014. But for a shareholder revolt in 2012, however, Nick Martin, who founded the company in 1985, might still be in charge.

That’s why it’s was so unusual this week when, on the same day this week, Ansys and NI each named the successors to their respective thrones.

Ansys appointed Dr. Ajei S. Gopal CEO-in-waiting, succeeding longtime head Jim Cashman. Gopal’s been a familiar face around the company, however, having joined its board in 2011.

Cashman joined Ansys as president in 1999, and was named CEO a year later. On his watch, Ansys’s revenues have grown from $50 million to almost $1 billion.

In NI’s case, it’s in some ways an even bigger transition. As a researcher at the University of Texas, James Truchard cofounded National Instruments in his garage in 1976. Come Jan 1., when Alex Davern takes the reins, it will be as chief executive and president of a $1.2 billion firm employing more than 2,000 workers worldwide.  If Davern has an advantage, he’s held a variety of positions in finance at NI dating to 1997, and he’s been Cashman’s right-hand as COO and CFO since 2010.

What’s clear is that the software industry, while dependent on innovation, also prides itself on stability. Since the market is characterized by a relatively small number of major players, the ability to maintain relationships with key customers may have something to do with that. That the leadership at most of the aforementioned companies has been relatively controversy-free doesn’t hurt, either.

From the looks of it, the heir apparents promise more of the same. Given the respective performance of the CEOs they are following, that’s not a bad thing.

 

 

Eagle’s New Nest

It’s been almost a month since Autodesk acquired Cadsoft, and more importantly, its Eagle line of CAD tools, from distributor Premier Farnell. Yet there’s been nary a peep from Autodesk on how it plans to adopt or implement its new toys.

Autodesk, of course, is a developer of 3D design software for a variety of uses, including engineering. The companies had an existing relationship leading up to the sale. Newark element14, a Premier Farnell subsidiary, has been distributing Autodesk’s MCAD tools since last year.

I understand why CAD tools appeal to distys: they represent an opportunity to lock in customers by leveraging the designer’s favorite tool to act as a conduit to ordering parts. And Premier Farnell wasn’t alone in this regard. Mentor and Digi-Key teamed up in late 2014 to offer a simplified flow of schematic and layout tools. (While that arrangement still exists, there’s been precious little news about it since its launch.)

But distribution and software development are too very different animals. Neither one is easy, and they require different skill sets and strategies. I’m not surprised, then, that Premier Farnell decided to cut bait.

The deal from Autodesk’s perspective is infinitely more intriguing. It’s a $2.5 billion software company that has built its name on easy-to-use 3D modeling tools. It says its goal is to “provide the world’s most innovative, and engaging design software and services … to digitally visualize, simulate, and analyze projects.”

Will Eagle go the way of Ohio Design Automation, which was purchased by PTC in 2004, and whose flagship electronic design verification product InterComm is now rolled up into PTC’s Creo flow?

I don’t think so. As the MCAD/ECAD link grows tighter, Autodesk almost assuredly will be looking to leverage Eagle with its extensive customer base. Eagle’s cost structure may change: Premier Farnell knocked the higher-end commercial version prices down quite a bit. But when Autodesk breaks its silence on Eagle, I think it will be in a big way.

60-Minute Simulation

Even for a software company, I’m sure it will be no simple task to analyze customer use and assess the ROI on the so-called “elastic licensing” Ansys just rolled out to enable customers to adjust on-the-fly to meet peak demands. I can’t imagine how crazy life will be for the poor soul who gets the hopelessly thankless task of sorting through all the customers who take advantage of this.

But the one hour rentals, the electronics simulation software company’s latest pay-per-use model, is less interesting for what it allows than for what it might foreshadow.

If I understand Ansys’s offer correctly, this is a bolt-on option for existing licensees, not a standalone offering. Useful? Certainly. Groundbreaking? Not so much.

But could true pay-for-play software be far behind? Reports have surfaced over the years of such licenses being available to certain subsets of users and in certain geographies. I’m unaware of it being rolled out on a wide level, however. It’s kind of like paying for a digital song that then disappears after five or 10 plays.

The emerging legion of new hobbyist/DIY and unconventional startups may be too attractive and otherwise too difficult for the larger players to land, however, unless they try something different. Many of these companies are not interested in paying thousands of dollars for a tool seat. They aren’t designers. They are hardware enthusiasts, and design is just a step in the process (or for some, a hurdle) to realizing their vision.

Even if the margins are weak or, more likely, the revenue elusive, will the sheer size of that audience be too tantalizing for the major ECAD companies to hold fast to their current licensing models?

 

Good Talk

The big story out of IPC Apex Expo last week – about the only story, really – was the introduction of an open communications standard by Mentor Graphics’ Valor division, followed by the rapid response by more than two dozen assembly equipment providers and software developers over shared concern that the solution to machine-to-machine communication might end up residing in the hands of a single company.

At the heart of the matter is the so-called Industry 4.0. Also referred to as IIC (US), Made in China 2025 (China), Industrial Value Chain Initiative (Japan), Manufacturing 3.0 (South Korea) and other names, it stands for the capability for different equipment, made by different OEMs, to share bi-directional data over an open, yet secure, platform. Done right, it’s a major step toward permitting manufacturers to pick the best machines for their specific needs, versus being beholden to a single line solution. Fundamentally, it’s at the heart of a fully beating Internet of Things; some feel the fully automated factory can increase production efficiency by more than 30% over time, adding billions or more to national GDPs.

Let’s start with the Mentor specification. Two years in the making and announced just prior to the annual IPC trade show, it was released at the Las Vegas event as OML, which stands for Open Machine Language. Having years of experience writing translators for various assembly line machines, Valor took those translators and installed OML in front of them, and packaged the combination in a black box. Thus, in a relative instant, a solution to a much-discussed electronics assembly problem was at hand; OML satisfied the need for machines to talk to each other, and the box handled any connectivity issues.

Mentor planned to make OML available to any company through a partner program and would retain ownership over the protocol while relying on the partners to help shape the future direction of the specification.

In Las Vegas, of course, everything’s a gamble. Once word got around the show, equipment vendors said “not so fast.”

Mentor’s angle was to multiply the use of IoT through OML, thus exponentially expanding the market for its Valor tools. Perhaps worried by the legalese, or the potential for a single “owner” to license and potentially change or even shut out competitors, roughly two dozen assembly OEMs met over the course of two days to hammer out an agreement that reshapes the trajectory of the specification. Several equipment OEMs PCD&F/CIRCUITS ASSEMBLY spoke with agreed OML is technically sound but felt the business issues inherent in licensing a corporate spec could pose a host of problems. Up against this strong front, Mentor pivoted and offered OML as a starting point for a to-be-determined IPC standard.

In one sense, then, bi-directional communication goes back to the drawing board. Some 15 years ago an IPC committee published a shop floor equipment communication standard labeled IPC-2541 and colloquially known as CAMX. One presenter at the Apex sessions demonstrated how IoT could work using enhanced CAMX. The early take – and this has yet to be finalized, as not even the charter is on paper yet – is the task group will study a combination of OML, CAMX and perhaps other, yet-to-be-written software as part of its IPC mission.

All sides agree there will be an emphasis on speed. If nothing else, OML forced the industry to confront the fact that not only is a standard needed, it was needed yesterday.

Going forward, it will be up to each software company and manufacturer to leverage the IPC standard as they see fit. It remains to be seen if Mentor will ultimately concede OML or whether it will attempt to go it alone.

Some will recall a similar scenario with the data transfer formats for printed circuit board designs. Various specifications sat mostly idle for years, IPC-D-350, IGES and EDIF among them, until the powers behind Valor’s ODB and IPC’s GenCAM formats squared off. Valor donated the XML version of ODB to IPC in 2008, yet continues to maintain its ODB++ format. GenCAM evolved into IPC-2581, and upon Mentor’s purchase of Valor, finally gained traction among worried software competitors and OEMs who feared being shut out of markets or forced to switch tools.

Regardless of the back story, this is where the industry stands today, and a basically workable plan is being formulated. The speed with which the industry moved – and Mentor should be thanked for spurring action – screams the need is present and widespread, and there is general consensus on the solution. That’s a great story. After all, in electronics, how often does that happen.

In Memory of Steve Chidester

Steve Chidester was a class act.

EDA software can be a cutthroat place, but good luck finding someone who would even think of saying something unkind about Steve.

Known inside Cadence as “Mr. Allegro,” Steve could as well have been called Boomerang for the way over three decades he always returned to the software company. Steve did three stints in all at Cadence, totaling 17 years. He had only recently returned to the company when he passed away from cancer last week at age 55.

While I had met Steve years ago, I didn’t really get to know him until he joined Zuken as head of product marketing in 2010. He was instrumental in getting the IPC-2581 data transfer format off the ground after 40-plus years in the mire.  At Steve’s invitation, I spoke on the topic at Zuken Innovation World that year, although I resisted his repeated urging to present at the company’s user conference in Tokyo. Something about not being fluent in Japanese always held me back.

Little details like that could never stop Steve, however. He was an eternal optimist, never one to get down either on a situation, himself or others. Colleagues tell me that even after learning, in late November, that he had a particularly aggressive form of cancer, he downplayed it, saying it was treatable.

He spoke often of his family — he had nine children plus several grandchildren. That always appealed to me as well, as I like going beyond the regular job-speak and getting to know the folks I work with around the industry.

In an industry filled with generous people, Steve was a particularly kind soul. I will miss him dearly.

Too Close for Comfort

This is a little bit like the old college prank of trying to see how many kids can squeeze into a telephone booth. Pretty soon everyone’s too close for comfort!

In this PCB assembly challenge, someone made a mistake and created a layout for rows of dual-flat no-leads (DFN) SMT packages without taking into account the size of the component bodies. The footprints are too close together, and the bodies of the components are touching.

Because they don’t all fit, as the packages are lined up there isn’t enough room, and alignment issues develop for some of the IC locations. They’re forced off their footprints, while others appear to be acceptable.

Figure 1

Figure 1. With DFN footprints too close to one another, component bodies are actually touching and causing alignment issues, literally forcing others off their footprints.

Figure 2

Figure 2.

As can be seen from the photos (Figures 1 and 2), the crowding causes alignment issues for locations IC1, IC5, IC7, IC9, IC13, and IC15. Locations IC3 and IC11 seem fine.

What can be done? It’s too late to redesign and order new PCBs, and there is no possibility of shrinking the dimensions of the components.

Figure 3

Figure 3. Removal of components in locations IC5 and IC1 have allowed the rest to fit properly.

Luckily, the customer had a solution that worked: removal of the components in locations IC5 and IC1 (Figure 3). This permitted the remaining parts to fit correctly; it made “breathing room” for the rest, and best of all, was accomplished without compromising the functionality of the circuit.

Roy Akber

www.rushpcb.com

 

The Top 10 in PCD&F

Yesterday, we reported the top 10 best-read articles published by CIRCUITS ASSEMBLY in 2015. Today we list the best-read articles from PCD&F.

The list includes features that were published for the first time in calendar 2015. Rankings are based on web site hits, and do not include — for obvious reasons — the number of reads in the print version of the magazine.

1. “Embedded Passive Technology Materials, Design and Process,” by Hikmat Chammas
2. “Beyond the Vault: The Evolution of PCB Design Archiving,” by John McMillan.
3. “01005: Size Does Matter,” by Arbel Nissan.
4. “Trace Current/Temperature Relationships,” by Douglas G. Brooks, Ph.D. and Johannes Adam, Ph.D.
5. “Microsectioning of Laminates,” by Karin Rudman Prieto, Ph.D., Peg Conn, Lizabeth Lagos and Charles Lehmann.
6. “The Changing Face of the Hardware Design Engineer,” by Steve Hughes.
7. “Refining Lean NPI at Optimum Design Associates,” by Randy Holt.
8. “The 3 Challenges Facing the Future of PCB Design,” by David Wiens.
9. “How Hot Is My Via? (Cooler Than You Think!),” by Douglas G. Brooks, Ph.D. and Johannes Adam, Ph.D.
10. “In Search of Greater Tolerance,” by Peter Bigelow.

There was a definite advantage for articles that were published near the beginning of the year. If we adjust for timing, a feature on field solvers authored by Dr. Eric Bogatin and published just last month more than likely would have made the top 10. And although not reflected here, there was tremendous and perhaps disproportionate interest in flex circuits, given the smaller audience involved to-date in flex, with pieces by Mark Finstad (“Designing Flex Circuits For Wearable Electronics“) and Ben Jordan (“Designing a Successful High-Speed Rigid-Flex PCB“) just missing the top 10.

As always, we are grateful for our loyal readers and the many authors who contribute their expertise each month.

Raspberry Pi — What’s It All Mean?

What would you do with a computer that costs $5?

First, let me explain a bit. The Raspberry Pi, if you don’t know, is a small, inexpensive single board computer designed by the non-profit Raspberry Pi foundation in England. Its mission is to make computer-related education less expensive and more accessible to the masses. As a next step in that mission, it just introduced the Raspberry Pi Zero, with an MSRP of $5. So, you can buy a Big Mac, or a Pi Zero. You could buy some peanut butter, jelly and a loaf of bread, eat that for the next five lunches, and buy five Pi Zeros.

Now some folks have complained that it’s not very useful on its own. It needs a wall bug power supply, a micro SD card, a few cables, and a USB hub to connect a keyboard and mouse to.

That’s true, if you want to use it as a full PC workstation, which you can. It runs the “Raspian” distribution of Linux. But, I don’t think that’s where theRaspberryPi greatest potential for this thing lies. No, I wouldn’t use this as a workstation. It’s biggest potential, in my opinion, is as an inexpensive embedded controller.

It has I2C, SPI, and RS232 pins available, as well as plenty of GPIO. Attach a small daughter card with accelerometer, gyro, magnetometer, and GPS, and you’ve got a nice drone auto pilot. Attach a few sensors and a cell phone module, and you’ve got a remote data logger. What would you do with one of these?

Duane Benson
Little Jack Horner couldn’t get a plum out of this pi.

http://blog.screamingcircuits.com/