Viewlogic buying Eagle; CEO leaves

Electronic News, Feb 3, 1997 by Gale Bradley

Marlboro, Mass.--Evidence of the sea changes within Viewlogic Systems--one of the oldest electronic design automation (EDA) vendors still in business today--came to the forefront last week as the company agreed to acquire Eagle Design Automation; went forward with a realignment along customer segments; reported founder, chairman and CEO Alain J. Hanover is stepping down from his leadership roles; and released earnings that showed the company still fighting for profitability and top-four status in the EDA market.

Beaverton, Ore.-based Eagle Design, the capital stock of which was already 20 percent Viewlogic's, supplies software that allows for designing and verifying the hardware and the software of an embedded system at the same time. Under a license agreement with Eagle, Viewlogic currently sells Eaglei and EagleV, Eagle's software for embedded system verification and ASIC verification, respectively.

Will Herman, president of Viewlogic, said Eagle "is a key part of Viewlogic's strategy to provide our customers with best-in-class verification solutions to address the total electronic product design challenge. Eagle's breakthrough solutions are the best approach to a growing, critical design problem in the embedded systems market." That problem being the lack of time to wait for a hardware prototype and the inefficiency of engineering the software to accommodate a hardware parameter that could be changed if re-design and re-fabrication were not so costly.

Viewlogic made an investment in Eagle nearly two years ago (EN, Design Software, March 13, 1995), and began selling the Eagle products last year.

"I'm going to go out on a limb here and say this is the most strategic EDA acquisition of 1997," Viewlogic corporate marketing VP Shiv Tasker told Electronic News last week. For Viewlogic's ASIC tools combined with the Eagle co-verification software, Mr. Tasker said, "We see early adoption by telecom (system makers), and certainly we expect the entire embedded systems market (to adopt the strategy) in the next few years."

"We have found considerable synergy between Eagle and Viewlogic within the Viewlogic customer base, particularly in the ASIC design teams. With the addition of Eagle, the ASIC Innovator tool suite represents the most complete ASIC design and verification solution in the industry," said Gordon Hoffman, president of Eagle and now the designated GM of Viewlogic's Software group.

"I come from the chip side and hardware engineering," Mr. Hoffman told EN, "and over the last 15 years, I've seen a lot more software guys roaming our customers' halls and seen the hardware and software teams there battling each other...one of our customers called it a nuclear event. But now getting the software engineers an executable model, that hasn't been committed to silicon, is a necessity. That's what this agreement is about."

Mr. Tasker said the formation of the Software group Mr. Hoffman will manage occurred last fall, as Viewlogic was "pre-anticipating the acquisition of Eagle." Mr. Tasker said in forming the ASIC, Systems (board design), Software and Advanced Development groups, "the whole intent was to align ourselves by the way customers buy our products. And we could get away from an organization working along the lines of these independent subsidiaries." Viewlogic will be acquiring the remaining 80 percent of Eagle Design for approximately $6.4 million in cash plus certain contingent payments tied to future sales. The acquisition will be accounted for as a cash purchase and Viewlogic will charge approximately $4 million-$5 million in one-time, non-recurring costs, primarily reflecting in-process R&D costs, in the first quarter of 1997. The acquisition is scheduled to be completed quickly, within the next 30 days.

The reorganization and new directions have, as they often do, occurred concurrent to changes in senior management, and this culminated last week when Viewlogic said co-founder, chairman and CEO Alain J. Hanover is handing the CEO job over to Mr. Herman immediately. Nor will Mr. Hanover stand for re-election to the board in May, leaving the company he has led since 1984, it was said. Mr. Tasker, a key driver of the realignment, joined Viewlogic from Cadence Design Systems last spring.

Mr. Hanover did not give a reason for his departure, but the company has struggled to maintain profitability in recent years and had a bruising fight in 1995 with the founders of Chronologic Simulation, a company Viewlogic acquired in 1994. Lawsuits in that case--which saw the Chronologic founders accuse Viewlogic management of reneging on promises of autonomy allegedly made--were settled last year (EN, Design Software, June 24, 1996).

Mr. Herman rejoined Viewlogic in 1995, when Mr. Hanover had Viewlogic acquire Silerity, the company Mr. Herman founded after leaving Viewlogic. Mr. Herman came in as executive VP and COO, and was promoted last year to president. Mr. Hanover will remain as chairman until the company's annual meeting on May 13, the company said.