Physical-synthesis tool vendor Magma Design Automation Inc. is the latest EDA company with plans to poke its toe into the initial public offering waters. But some industry observers say Magma may get a chilly reception when it dives in. More optimistic analysts say that Magma's integrated approach to physical synthesis makes it a significant player among chip design companies that are retooling from older EDA environments in which synthesis and place and route were separate tools, into new cutting-edge environments in which synthesis, place and route, and other tools are combined. But now amidst the economic downturn, Wall Street and investors are looking for stable companies producing real revenues.
Investors seem to be buying it.
All of those companies did this well despite the fact that none showed true bottom-line profitability, and each required investors to take a leap of faith regarding the companies' future profitability. But it will be interesting to see if investors stay committed to EDA when other segments of technology start to make their comeback. Based on the S-1, Magma too will require investors to take a leap of faith. And it issued 4.5 million shares to Moscape investors when it acquired that company in June of last year. In addition, in April Magma laid off 20 percent of its work force , which today consists of roughly 200 people.