Synopsys SNPS
Q2 2010 Earnings Call Transcript

Operator: Rich Valera, Needham & Company.

Richard Valera - Needham & Company: Aart, you mentioned a number of challenging factors in the customer environment, but could you talk about how it compares with one quarter ago or maybe two quarters ago, was it roughly stable, sort of unchanged or has anything changed to be more challenging in that time period?

Dr. Aart de Geus - Chairman and CEO: I would say that in general it’s become more positive, no question about that in terms of the outlook from our customers. They are all reporting the same thing, which is lack of capacity, thus pricing going up and all in all the difference (you’ll add for them). Having said that, they are still maintaining their watchfulness on the cost side of the equation, and I think that as more money becomes available from an R&D point of view that money will go on those areas where there can be more differentiation. One piece of evidence for that would be the very fact that we’ve seen some of these, the number of designs in 40-nanometer actually tweak up. And so that’s not a surprise because last year actually it sort of slowed down and now people are catching up. So all in all I would say it’s a better environment.

Richard Valera - Needham & Company: Would you consider the competitive environment similar to a quarter ago and how would you say pricing has averted an anecdotal account of at least one large renewal where there was apparently some very aggressive pricing to try to take share, can you characterize the competitive environment?

Dr. Aart de Geus - Chairman and CEO: Sure. Well, I think it fundamentally hasn’t changed all that much. I think companies are either trying to survive or trying to grow. Typically, if you have a market that overall is not changing all that much that makes for a very competitive market. But then, I am (indiscernible) thinking that it’s always been very competitive and that the rates for technology keeps going and over time that will determine how well a company does. I don’t know about any specific deal that you’re referring to, but I can only communicate that all the large things that we’ve been doing, we’ve been able to maintain essentially a flattish run rate or slightly positive. So, so far so good for us.

Richard Valera - Needham & Company: So would you characterize bookings as on track for the year relative to expectations?

Dr. Aart de Geus - Chairman and CEO: Absolutely.

Richard Valera - Needham & Company: And then just Brian, with respect to the acquisitions, can you give us a little more sense of the revenue contribution? I mean, can we assume that your base revenue guidance was essentially unchanged and that the incremental addition is from the acquisitions? And also on the dilution front can you give us any sense of how many EPS of dilution there might have been?

Brian Beattie - CFO: Yeah, absolutely. When you look at our guidance for the year, we have factored in the three new acquisitions into that guidance and effectively tightened our range and raised that slightly to reflect that. The core business itself all of the existing business is right on track for the year as well. So we've raised it just really to reflect the acquisitions in there. As you know, with software purchase accounting there is very significant haircuts that come in, and we indicated that while the expenses fully come in as the employees come onboard, we did reflect about a half a quarter of expenses in advance, so it becomes slightly dilutive for the year is what we indicated and not withstanding that held on to the total EPS guidance that we issued earlier. And then looking out to next year, clearly we would expect still some impact from that haircut, from the deferred revenues that we acquired, but clearly that will be built into our revenue guidance that we project in December for FY '11.