Mentor's Calibre tool licenses lead to boom quarter

SAN JOSE, Calif. -- In a sign that the EDA industry is beginning to capitalize on the general semiconductor rebound, Mentor Graphics said it expects to beat its previous estimates of $190 million in revenues for the fourth quarter of 2003.

Greg Hinckley, Mentor's president, said three times as many licenses were booked in the fourth quarter for its Calibre DRC/LVS tool than it did in the fourth quarter of 2002. Calibre revenues alone exceeded the $190 million estimate, Mentor's revenue estimate for all product lines in the fourth quarter.

But while Mentor revenues exceeded its own as well as Wall Street expectations, the company also said its earnings per share (EPS) before good will remain in line with projected estimates of $0.30 for the quarter and $0.80 for the year.

Hinckley attributed the results to heavy bookings of Calibre for the quarter, which also triggered a large bonus payout to the Calibre employee group at Mentor.

Hinckley said Mentor created an incentive program several years ago for engineers to develop innovations. The Calibre group had to reach $100 million in revenues or 50 percent marketshare to receive bonus payments. "Even in November we didn't think we would hit that mark but it turned out to be an exceptional quarter," said Hinckley, noting that the move to 90 nm is driving the need to license "everything."

Mentor also said operating expenses were also affected by the recent strength of the euro over the dollar. Fifty percent of Mentor's research and development is done in Europe.

Mentor's stock reached as high as $18.01 on Wednesday (Jan. 7), $2.29 over yesterday's close of $15.72.

The company is scheduled to officially release its fourth quarter and 2003 results after the close of the market on Jan. 27.