WorldCAD Access

How Many Different Ways Can You Say It?

Here's a collection of headlines of Dassault buying... wait, I'll let them say it:


Australian IT: IBM sells unit to Dassault for $US600m

Michigan Technology News: Dassault Buys PLM Group From IBM For $600 Million - Ends IBM CAD Era

The Hendersonville Times-News: Dassault Takes I.B.M Unit for $600 Million

ChannelWeb: French Firm To Acquire IBM's PLM Sales, Support Business

Crain's Detroit Business: Parent of Auburn Hills-based Dassault Systemes Americas to buy IBM Corp. sales unit

PC World: Dassault Buys IBM's PLM Software Distribution Activities

The Register: Dassault picks up PLM unit from Big Blue

Zacks.com: IBM Selling Operations to Dassault

InformationWeek: IBM Spins Off PLM Unit To Dassault

Live: DS Conference Call

8:39am -- Alright, I'm here with the Dassault Systemes conference call explaining their acquisition of IBM PLM. 

8:41am -- Bernard Charles is explaining that by 2007 Dassault and IBM began to realize that the sales arrangement of PLM sales was getting complicated -- after 28 years of working together. Dassault began to take over some of IBM's sales.

As they were thinking of the next ten years, they realized that all of Dassault's software is getting so integrated that the parts cannot really be sold separately. One driver was customers wanting an easier way to integrate.

8:44am -- The slowdown of the last 12 months is getting consumer goods companies and others to adopt PLM faster. The question then became, who would invest writing software for new sectors -- DS or IBM?

Came to the conclusion that simplification and expansion required a single direct sales force. This was the right moment to transfer 700 professionals in 60 countries to Dassault, all of them dedicated to large companies.

8:46am -- This is also building up the future of Dassault, even as it is a very large [financial] investment. Will continue to work with IBM as a Global Alliance partner, but no longer need to share royalties on applications.

Customers are very pleased, no negative comments.

8:49am -- Deal to conclude probably in Q1 of next year, the major job being integrating IBM employees with DS. It could not happen unless one was ready to sell and one ready to buy.


Q&A Session

Steve Wolfe: Clarification on remark that this simplifies the customer engagement process. In the past, IBM has decided on a case-by-case basis whether to carry a new Dassault product, even if the customer wanted it. Will this change?
Answer: Yes. 

Wall Street Journal: What % of revenue was sold by IBM last year?
Answer: About 30-35%.

WSJ: Does this make IBM freer to work with rivals like PTC, and you freer to work with IBM rivals like Oracle?
Answer: There never was exclusivity in our contract for the last 20 years. IBM allowed customers to use Oracle and non-IBM hardware.

Managing Automation: IBM is a partner in your cloud computing. Does this increase the level of IBM's involvement?
Answer: Cloud is important for providing subscription-based services for small and medium size companies who could not otherwise afford our software. IBM is a great company to lead the activity on private clouds. But it is still up to the customer to choose; nothing exclusive.

Simply Media: It is not clear to me how this changes for customers. Does this mean they go to an office with 'Dasasult' on it instead of 'IBM.'
Answer: That is a very simple way to put it. We have six Dassault brands right now. But IBM focuses mainly on CATIA and ENOVIA, marginally on the others, and not at all on SolidWorks. It is not the plate on the shop, but the simplification of the contract for the customer. 

Ray Kurland: Do all 700 IBM PLM employees have to join Dassault? What is IBM's ongoing involvement -- can you detail it? Where is IBM middleware going?
Answer: IBM PLM is a well-defined entity; its head [Al ...] will join DS. We want to hire all of them, they are all welcome to Dassault. If they have contracts with IBM, they are required to join Dassault.
IBM middleware is a powerful organization, we need them for consulting and business transformation. 
Many of the 1000+ IBM PLM customers had already been contracting with us.

RK: Revenue is $400 million for nine months -- how much is license and how much service revenue?
Answer: It is mostly license revenue.

Kenneth Wong: My understanding is that PTC and Siemens are also IBM Global Alliance partners. How does this deal give you advantage over your two main rivals.
Answer: I think anyone can claim to be an IBM GA partner, but there is reality. I think this move makes it easier for us to work together. The question is How do you trust each other to move on? There was some activity by our competitors with IBM, but we don't care. I think there is significant value for IBM to be with us. As long as IBM applaud the move, it is a good sign.

9:14pm -- end of call.

From the content of this call, I see that the other advantage to Dassault is a $530 million pop to its annual revenues. Combined with Autodesk recently declining revenues, I wonder if this is enough to make Dassault Systemes the #1 CAD vendor based on annual revenues? We'll find out as DS and Autodesk reveal their quarterly numbers in the next month.

Dassault Buys IBM PLM: $600 million

In a late evening press release rushed out by Dassault Systeme's pr team, the company announces it intends to buy IBM "The Future is Bright" PLM for $600 million, cash: "We've just inked the largest deal in DS history."

The deal will take some time to complete, probably not until sometime in the first half of 2010. In return, Dassault becomes one of IBM's Global Alliance partners. 

The reason: Dassault wants all the direct sales it can get, says ceo Bernard Charles.

Looking forward, the wide adoption of 3D lifelike experience and PLM will require the combination of direct sales, our network of partners, and online communities.

Direct sales are more profitable when you don't need to share it.

The largest acquisition in CAD history was the sale of UGS to private investors, and then its subsequent purchase by Siemens PLM Systems -- around $2.4 billion. Another big one was Microsoft's acquisition of Visio (and IntelliCAD source code) for $1.2 billion a decade ago. 

Will this lead to other big CAD vendors feeling the pressure to make big, tactical acquisitions? Obvious big targets include ANSYS (FEA), SpaceClaim (direct modeling), and Bentley Systems (water and stuff) -- each of which could go for similar price tag, give or take a few hundred  million.

I am unfamiliar with PLM firms, but I wonder if some of them are up late tonight talking on their iPhones with acquisition advisors on how to pretty themselves up for potential suitors.

Sold! MSC Goes Private

The majority of MSC.Software Corporation's shares agreed to merge MSC, Maximus Holdings, and Maximus. The payoff? $8.40 per share in cash.

Source.

Sold! CadSoft -- No, Not That One

Premier Farnell of England pays e7 million (US$9 million) for both the German-based CadSoft Computer GmbH and the US-based CadSoft Computer Inc. The 20-year-old CadSoft has sold its EAGLE software (PCB design, schematic capture, board layout, and autorouter) to 40,000 engineers.

(This sale has nothing to do with that other CadSoft that sells Envisioneer software for architects and contractors, and is located in Canada.)

Premier Farnell sells 400,000 electronic products and distributes another 4 million through its Farnell, Newark, CPC, Premier Electronics, MCM, Akron Brass, and TPC Wire & Cable divisions. So, what does it want of CadSoft Computer? It finally gives Premier Farnell electronic design software.

The co-owners of the German CadSoft Computer could make another e5 million should certain criteria be met following the sale.

Source.

Bidding War Over MSC

MSC Software was all set to be bought out by Symphony Technology Group for $7.63 per share (roughly $370 million). Then last week came a better offer from an unnamed third-party for $8.15/share.

Symphony matched the offer, and now MSC says they're "carefully considering the Symphony Revised Offer and the Third-Party Offer." Over the past few months, the company's share price has hovered just under $8.

Source.

Sold! HPC Buys Esperient

Right Hemisphere has sold Esperient and its Creator software to Home Partners Corporation. According to the email blast sent out this morning, very few Esperient employees lost their jobs. Otherwise, the future is bright:

HPC is committed to developing Esperient Creator in the long term and has provided all necessary funding to allow us to expand the development team and ensure the long term future of the product. 

All I could find out about HPC is that it is a "provider of Home Improvement project support and contractor matching services to residential homeowners."

The Creator software reads 50 3D formats, and then creates interactive 3D content with built-in procedural modeling for architecture, education, interactive training, and so on.

Source.

Sold! MSC Software

MSC Software has sold itself to a private equity group for $360 million (about $7.63 per share). Buyers are Symphony Technology Group and Elliott Management Corp.

Source.

But Lawyers Unhappy

Shareholders Foundation is hoping to cash in on the sale by declaring the price too low. The...

...deal appears to be unfair, given the fact that ... as recently as October 2008, was trading above $10.25 a share, substantially higher than the current offer.

Solution? Sue 'em -- the surefire way of making unhappy lawyers happy again.

Source.

Bhatt Assures Contractors

After a statement from Autodesk sounded to some that it was discontinuing development of its ConstructWare online project management software, owners of half-billion-dollar construction projects became concerned, reports ENR.com in Collaboration Tool Feels a Chill And Hearts Skip a Beat.

But an email from Jay Bhatt, senior vp of Autodesk’s AEC Industry Group, assured them: "The purpose of this e-mail is to tell you we are, in fact, investing in the development of Constructware and moving the product forward."

Again we see the danger in entrusting data to the cloud -- in this case, limited to a few days of worry. The only solution we can trust, however, consists of perpetual licenses for software running on our own servers -- aided by backups to an external site.

LocationLogic Worth $25 million

TeleCommunication Systems is buying Autodesk's old LocationLogic division for $25 million -- $15 million cash and $10 million in TCS stock. But they're not buying the division directly; Autodesk earlier this year unloaded the division to a couple of private equity investors, Hale Capital Partners and Hale Global. No word on the profit the investors made on the sale.

TCS figures the investment will pay off quickly, since LocationLogic generates $18 million a year in gross revenues -- and that the niche is growing 50% a year, as anticipated by market research firm IDC.

Source.