Thursday, April 27, 2006

Parametric to buy MathSoft

Only a month ago I reported on some MathSoft financial news. Now we have the answer to how the makers of MathCAD are going to stop making losses - they are selling up and going home!

CAD/CAE software giant Parametric is to buy MathSoft for the bargain price of $63M. This is a price per earnings ration of just 3. Compare that to Parametric themselves with PPE of 22, or the somewhat less realistic valuation on Google of 70. It looks like the backers, Edison Venture Capital, are pretty keen to get their recent $10M investments back.

Some of the information released confirmed my suspicion that the "Managed installations" in the previous news, were not so impressive. They work out to have an average value of $3000 per company. Not exactly the corporate site licenses that the press release implied.

What will happen next is known only to the senior management of Parametric. But what usually happens in takeovers is costs are cut by getting rid of people that do jobs already covered by the buyer. The recently opened MathSoft offices, that now look more like an expensive advert to Parametric, than a serious business step, may close. And at least some of the remaining distributors in other countries will be replaced by Parametric's existing sales teams.

I think we can safely expect the technical direction to focus on integration and interoperability with Parametric's other products. MathCAD has long focused on engineering more than science and any lingering interest in science may now be gone.

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