Power isn’t the problem, it’s the specification. Frequency (or gate count) is the problem. Microprocessor companies that are bragging about the speed (multiple GHz) of their mobile processors are laughed at by the cell phone designers.

can you, please, clarify your statement “Emulation, which has been used for developing low-power chips…”

“Low-power”?

Thanks,lauro

Your commentary on Carl Icahn and his interest in Mentor is way off base. “So what’s really behind Icahn’s charges? Are they legitimate?” Yep, they sure are.

>> “First, Icahn claims that Mentor’s expenses are high compared to the company’s revenue. He’d be correct in many industries, but EDA and other highly complex technology sectors require huge R&D efforts.” Way to ignore the facts, Ed — Icahn was complaining about Mentor’s spending on SG&A (Sales, General and Administration). He said nothing about R&D -– but since you did, Mentor spent 30 percent on R&D, less than all the other public EDA companies, with Cadence at 39 percent, Magma at 35 percent and Synopsys at 34 percent. Whereas Mentor at 44 percent spent more on SG&A than Cadence (42 percent) and Synopsys (35 percent), although less than Magma’s 47.

>> “Second, Icahn said that Mentor’s management has done nothing to promote shareholder value. So why has he continued to buy up Mentor stock? Apparently no one on Icahn’s staff understands just how complex a new rev of a DFM tool suite or a high-level synthesis tool can be. The market does, though. Mentor’s share price is up 70% in the last year and it grew about 50% in 2009.” I have no idea why you mentioned DFM in this paragraph, but the fact is Mentor stock is up 70 percent precisely BECAUSE Icahn has been buying. Go back and take note of when it became public that he’d taken an interest and then map what’s happened. And as for the last couple days, the market is probably reacting positively to the fact someone FINALLY has an interest in getting full shareholder value out of MENT.

>> “Icahn doesn’t necessarily want to see Mentor sold whole, although he would never admit that publicly. If it raised Mentor’s stock price, Icahn would get a big piece of the action. But the better scenario from Icahn’s standpoint would be to see lucrative pieces of the company sold off individually.” Yes, that’s a better scenario for Icahn. As it would be for all Mentor shareholders. And I suspect he wouldn’t give a hoot about saying it publicly.

>> “One way to do that is to keep top executives off balance and say they’re padding their own pockets with huge profits and living lavish lifestyles. That hardly jibes with the practice of CEO Wally Rhines and president Greg Hinckley to fly coach, despite the millions of miles in frequent flier accounts. And with nearly 9 million frequently flier miles under his belt, Rhines doesn’t really have any time for the ‘country club’ life that Icahn accuses him of living.” Ha. Wally and Greg fly first class (there are witnesses – ask around). I don’t begrudge them that at all but get your facts right.

>> “Business is business, of course. People with good business instincts, lots of money and a team of fast-talking investors and lawyers have a good success rate in twisting corporations to run in their own direction. But this is a business they clearly do not understand, and they will have a very tough time getting a buyer for technology that is integrated across a flow of highly integrated tools or a built-in self test product suite that applies to a small but very important set of customers needing ever more complicated technology.” Really? Why? There was a buyer for this very company willing to pay more than the current share price a couple years ago. Name of Cadence Design Systems – perhaps you’ve heard of them.

>> “… it’s a sure bet that Icahn has no idea what the real value is of those pieces [of Mentor] and to whom. It’s unlikely that anyone does, until a buyer offers a price.” Yes, Ed, true. That’s the whole point. Icahn would like to find out.

Your final comment is perhaps the most troubling, suggesting that Icahn is posturing. I don’t exactly know what you mean by that (or why you care) but despite your characterization of his press announcement as “impromptu” it was in fact very prompted: by an underhanded attempt on the part of Mentor management to manipulate the mechanics of board nominations so as to prevent anyone from taking control of that group and do exactly what Icahn and others have asked for and what Wally and Greg fear: replacement of current management with someone who will manage the company in the interest of those who actually own the company. As a former shareholder in Mentor I can say only that it is high time.

I can only see Carl Icahn seizing this opportunity opened up by Cascade to cash out at a profit. The only way to get out with a gain, from Mentor’s current stock price, is to sell the entire lot, all at once. Which requires a large buyer able to execute such a transaction.

The complaints hurled by Drapkin and Icahn (mostly Drapkin) on CNBC apply to the entire EDA industry, not just Mentor Graphics. EDA is a niche technology sector seeking to unlock its value, where everyone (from the Big 3, including Mentor, some midsize and many startups) chase the same customers who pit them against one another.

Unlike Cadence or Synopsys, Mentor doesn’t have a viable front-to-back product line any more. Calibre is a cash cow, but ICStation is an industry joke. This is exactly the kind of opportunity Icahn looks for. Watch him toss losers like ICStation in the trash, and show higher profits after one quarter.