) recently completed the acquisition of privately-held software
maker RSoft Design Group Inc. Financial terms of the deal were kept
New York-based RSoft is an independent provider of photonics
design and simulation software. The company's designs and software
are used by OEMs (original equipment manufacturers) in the
telecommunications, semiconductor and electronics segments.
Synopsys makes software used to design, test and develop
semiconductor chips. It has its own set of electronic design
automation products, which include optical design tools (imaging
and illumination design products). This latest acquisition will
complement its existing capabilities, enhancing its existing suite
of optical designs.
Notably, Synopsys stepped into the optical design market with
the acquisition of Optical Research Associates in 2010. Moreover,
the acquisition will also enable Synopsys to expand its product
line in the photonics market.
Strategic acquisitions have always been Synopsys' plan to
strengthen its product portfolio. In January 2012, the company
acquired privately-held software maker ExpertIO Inc. During 2011,
the company made a number of acquisitions. In October, Synopsys
completed the acquisition of privately held electronic design
automation company, Extreme DA.
In September, Synopsys completed the acquisition of a leading
independent provider of Verification Internet Protocol, nSys Design
Systems Private Limited. With the acquisition of Virage Logic Corp.
in 2010, Synopsys added embedded memories, including SRAMs (static
random access memory) and non-volatile memory, logic libraries,
embedded test and repair IP and configurable processor cores, to
its IP portfolio.
One thing to note here is that Synopsys has shown no initiative
to diversify to other lines of business, although its acquisitions
have consistently built its core competencies. Additionally, taking
over the same line of business will enrich its portfolio, while
also reducing integration time and cost.
Synopsys is set to announce its second quarter 2012 results on
May 23. Though the company's weak guidance for the current quarter
is disappointing, back-to-back acquisitions, solid product
portfolio and the recent tie-up with
Advanced Micro Devices Inc.
) could provide some cushion, in our view.
We remain Neutral on Synopsys shares until we witness
acquisition synergies. Stiff competition from
Cadence Design Systems
) also makes us cautious.
Synopsys currently has a Zacks #3 Rank (short-term Hold
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