Viewlogic moves to acquire Silerity; Will Herman returns

Electronic News, April 3, 1995 by Walter Andrews

MARLBORO, MASS. - Viewlogic Systems last week entered into an agreement toward buying Silerity for $5.5 million and acquiring the technology for a new set of tools aimed at the emerging deep-submicron design market.

Viewlogic also said that Silerity's president and CEO, Will Herman, will rejoin Viewlogic in the new post of executive VP and COO, reporting to Alain Hanover, Viewlogic's president and CEO. One of Viewlogic's five founders in 1984, Mr. Herman will be working out of Viewlogic's head quarters here.

"We believe that there's a fundamental shift going on in the market that's being driven by the narrower linewidth moving from 0.8 to 0.6 to 0.5 to 0.35 micron, creating a whole new set of requirements in the CAE tools. This is where Silerity has been focused and that's what we bring to Viewlogic," Mr. Herman said.

Mr. Herman confirmed that privately held Silerity had been close to making a private financing deal a few weeks ago (EN, Design Software, March 20) and had been approached by another EDA company, which he declined to identify other than to say it was one of the "three other major players": Ca dence, Mentor Graphics or Synopsys.

The deal was made with Viewlogic because of the "synergies between the companies" in technology and the distribution channel. "The distribution channel was the key," Mr. Herman said.

Viewlogic said it had entered into an agreement with Silerity to license its technology for inclusion in the Viewlogic synthesis product line. In conjunction with this license, Viewlogic has the right to acquire Silerity, subject to approval by both the Viewlogic and Silerity boards and the achievement of certain business performance goals.

A spokeswoman said Viewlogic has agreed to pay $5.5 million upon the closing and signing of the agreement, which must occur before Dec. 31, 1996. Viewlogic said Mr. Herman will have day-to-day respon sibility for the four Viewlogic business groups: Systems/Powerview, Personal Computer, High Level Design and High Performance Analysis, as well as corporate marketing and Strategic Account Services Consulting.

Mr. Herman said Silerity had been scheduled to introduce its initial product in November. "We are actually going to accelerate that" with the introduction of Silerity technology merged into Viewlogic tools, he said.

Robert Stern, an analyst with Smith Barney, viewed the acquisition as part of Viewlogic's "big effort to acquire high-level synthesis technology. They haven't been able to do well in the synthesis market for ASICs. You have to take notice that Viewlogic is going very aggressively at these emerging high-level design technologies)."

Mr. Herman declined to be specific about the merging of Silerity technology into Viewlogic products in the coming months. While noting Viewlogic's position in schematics, he said: "Merging Viewlogic's core tools with Silerity's data-path synthesis tool could result, if one were so inclined, in a very nice data-path driven design tool... No one has addressed this market before. There's a hodge-podge of tools in that area."

The other of the two major problems Silerity has been trying to deliver on, Mr. Herman said, is "the idea of not only synthesizing the logic of the chip but also synthesizing the physical characteristics of the chip, because as you get into deep-submicron design,the timing effects are much more determined by the physical implementation than they are by the logic implementation. So, all the current paradigm of tools breaks down ... It's important that the synthesis tool understands the placement and to some extent the routing within the chip to determine the correct synthesized solution." The result would be "a new generation of CAE tool."

Mr. Stern added, "Buying small companies is a legitimate way to do R&D in this industry. There's no barriers to entry, so people with good ideas often don't give them to their employer. They go out and form their own company. It's really hard to do original R&D just by paying employees. It makes sense to buy these little companies when they emerge with really useful technology."

Mr. Herman's rejoining Viewlogic as its COO "frees up Alain Hanover to concentrate more on the strategy. Obviously, some of the problems that they've had, especially in the fourth quarter, were related to operational problems that possibly could be averted in the future."

The analyst noted that for the fourth quarter ended Dec. 31, 1994, Viewlogic reported a profit of 1 cent a share on revenues of $31.6 million compared with profits of 32 cents a share and revenues of $31.2 million in 4Q93. "They made a penny, which is a disaster."

He said the quarter also was the result to some extent of Viewlogic's Vantage simulator losing speed relative to competitors. "The damage that was done over the course of the year by having a slower simulator affected, I think, some of their other sales," Mr. Stem said.

After the 4Q report, Mr. Stern revised Viewlogic's 1995 earnings estimate downward to 60 cents a share from a previous 85 cents a share. He said Viewlogic was expected to break even in 1Q95.