( ESNUG 480 Item 8 ) -------------------------------------------- [03/26/09]
Subject: "Positioning" consultant says Rajeev wants to sell to Cadence
This morning one of my readers sent me a link to a blog where an unknown
(unknown to me, at least) "strategy" consultant had written:
"I sat down with Magma's CEO Rajeev Madhavan recently, and concluded
that Rajeev has reconciled with the fact that he needs to get
acquired soon, and that Cadence would be his preferred new home for
Magma. Rajeev says that he has kept Magma focused on R&D, and is
the only company amongst the EDA majors to be able to do innovation
internally. I agree with this claim, and it is true that Magma has
a very strong presence in the convergence device segment with market
leaders like Qualcomm (QCOM), Broadcom (BRCM) and TI (TXI) as key
customers. Cadence would benefit from the capability of internal
R&D and also the progress that Magma has made from a product point
of view in the last year."
- Sramana Mitra on SeekingAlpha.com on 03/25/09
Surprized, I sent an email to Rajeev directly asking: "Did you really tell
this mgmt consultant that you're looking to sell Magma?"
His reply:
"Hi, John,
Thanks for asking. Everyone's entitled to write their own opinion and
speculation but nope, I didn't say that. Sramana has followed EDA for
some time and definitely has a lot of ideas about the industry, a lot
of which are interesting. She brought up M&A and talked about
consolidation in the industry.
I have said before that EDA is always active with M&A, but I've gotten
merger questions a lot over the years and just don't respond when it
comes to our own company (public companies can't do that).
Right now my focus is on product news we're preparing to make at our
MUSIC conference starting next week in Santa Clara. (Sorry, had to get
in that plug!)
Also, I started using Twitter recently and used it to comment on what
she said as soon as I saw the piece yesterday, but I'm glad for the
chance for a deeper response to your readership.
We intend to make news with our products. Thanks."
- Rajeev
OK, so this is Rajeev's diplomatic way of saying this Sramana Mitra lady was
full of crap. And he's being consistant, too -- it wouldn't make sense that
Rajeev would now suddenly blather about Magma M&A rumors when, over the years,
he's so diligently NOT ever blathered about Magma M&A rumors before.
---- ---- ---- ---- ---- ---- ----
Which begs the question(s): who is this Sramana Mitra woman and why is she
writing this about Magma? Why is she writing about EDA in general? What's
her background? What are her biases? Who are her "strategy" customers?
---- ---- ---- ---- ---- ---- ----
[ 2 days later ]
It's Friday. Now that I have some free time, let me google this mystery
consultant to see what more I can find out about our Ms. Sramana Mitra.
- Sramana seems to blog primarily for a Wall Street audience on
financial sites like SeekingAlpha.com, TheStreet.com, Forbes.com.
She also has her own web site: SramanaMitra.com.
- "Sramana has developed a well-regarded methodology for Positioning
which she has used repeatedly in different situations and across
a variety of market segments" from her bio on her own web site.
- One of her clients is/was "a $100 Million Business Unit of Cadence"
as reported in her SeekingAlpha.com bio.
- In her 06/12/07 column in SeekingAlpha.com she writes "a Private
Equity player buying Cadence doesn't make a hell of a lot of sense"
while everyone else in EDA (and the New York Times) was buzzing
about the Blackstone Group taking Cadence private.
- On 01/31/08 Cadence stock dropped 53% (from $15.16 to $9.89). In
her 02/12/08 column, Sramana writes about the "competitive advantage"
Cadence has with it's "EDA Card all-you-can-eat strategy" and further
in the column she puts in bold:
"This is the most profitable Cadence has been in a long time."
She concludes her same column with:
"For the moment, if you are an investor or fund manager considering
buying Cadence's stock, your best bet is 'Market Share' based on
'EDA Cards,' and not on innovation, or acquisition. The bottom
line is cold, hard sales."
- She has written a number of columns advocating that Mentor should
either be bought out or broken up by an LBO firm. When Cadence finally
made a hostile bid on Mentor, Sramana wrote that Mike Fister had showed
some "boldness, some imagination, and possibly some courage, even."
This woman really doesn't like Mentor.
- Sramana also wrote many times about Magma's demise as in her "Will Magma
Die on the Vine?" column or her "Natural Disasters: Is Magma's Loss
Cadence's Win?" column or her "Magma Squeezed From Both Sides" column.
This woman also really doesn't like Magma.
- Back in 10/27/06 Sramana appeared to be more EDA USER oriented.
"If EDA, as an industry, collapses, or becomes a monopoly/duopoly,
the innovation in semiconductors will also stall."
Somewhere along the way she did a 180 degree reversal and now appears
to back the Synopsys/Cadence Big Brother "Microsoft" model of EDA:
"Once Magma is out of the picture, it will be Mentor's turn to be
the company dying on the vine. Whichever way we look at it, EDA
needs to become a two-horse race as soon as possible, for vendors
to regain some negotiating power over pricing, and address one of
the core dysfunctions of the sector." (03/25/09)
So, from what I've found on the web, Sramana Mitra is a strategy consultant
who specializes in "positioning" who happens to blog on some very big name
financial web sites and who did/does work for Cadence and she happens to
cheer the deaths of Magma and Mentor so "vendors" (presumably Cadence and
Synopsys) can regain some pricing power against the EDA BUYERS.
OK, so I might not like many of her ideas, but she seems to have thought
them out -- plus she's getting at least some Wall Street people to half
recognize the SNPS, CDNS, MENT, and LAVA ticker symbols. Fair enough.
- John Cooley
DeepChip.com Holliston, MA
P.S. And after reading all those anti-Magma comments Sramana made
throughout her writings, I'm floored that Rajeev managed to only
call her ideas "interesting". Talk about some amazing restraint!
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