The Antenna

Two companies in the hardware-assisted verification marketplace looking to merge and not a single patent-infringement lawsuit lurking somewhere? Not likely. Aart de Geus, chairman and chief executive officer of Synopsys Inc., Mountain View, Calif., is going to get even more familiar with the myriad technological turf battles being waged in emulation as he goes about acquiring Ikos Systems Inc. of San Jose over the next 14 months (see "Synopsys Buying Ikos," page one). de Geus and Ikos CEO Ramon Nunez both told analysts last week that they did not see any merger impact coming from the Ikos v. Axis Systems Inc. and Axis v. Ikos patent-infringement cases. But Mike Tsai, CEO of Axis, seems to be gearing up to make an impact. "Actually, (Ikos) is violating a very fundamental patent of ours ... and this intention of merging with some other simulation (Synopsys' VCS ) may have a really strong implication there. In fact, (Ikos is ) trying to do that already with the 15M (Ikos' newest emulator); that's their future direction. In order to execute their roadmap, they have to deal with this patent," Tsai said. However, Ikos (nasdaq: IKOS) as part of Synopsys (nasdaq: SNPS) could have new patent ammunition—related not to emulation but to HDL simulation—with which to battle Axis. "Our own simulator, Xsim, is just like a VCS; it's a compiled software simulator," said Tsai when asked if Axis can offer customers an integrated simulation and emulation package as Synopsys plans to do. But how much "just like a VCS" remains the question.

Don't expect the massive volumes eyed by contract manufacturer Flextronics International Ltd. of Singapore and Motorola Inc. of Schaumburg, Ill., in their staggering telecom outsourcing deal last year to actually materialize. The pair last week revised their five-year, $30 billion deal in light of the current business slump. Flextronics (nasdaq: FLEX) and Motorola (nyse: MOT) said they have revised their strategic alliance because of the current market conditions, although Motorola will continue to rely on Flextronics as an outsourcing provider. However, Motorola said it believes the total volume of outsourcing as outlined in the initial agreement will be difficult to achieve in the near-term, making it difficult to reach the original volume commitments. Wireless industry forecasts and the current high-tech recession led both companies to "mutually unwind" the contract signed in May 2000, they said. The companies will remove the volume incentives and five-year time frame originally negotiated within their agreement. In connection with the modification, Flextronics will repurchase the equity instrument previously sold to Motorola under a supply agreement signed last year. While the volume commitment is no longer applicable, the companies remain committed to growing and continuing the strategic relationship. Meanwhile, other new telecom outsourcing moves continue to surface (see "More Telecom Outsourcing OK'd," page 36).

Advanced Micro Devices Inc. (AMD) last week said sales or its second quarter, which ended July 1, were $985 million, about 17 percent less than first-quarter sales of $1.2 billion. The Sunnyvale, Calif.-based chipmaker (nyse: AMD) said sales were also down about 11 percent from the same period a year ago. With 341 million shares outstanding, AMD is estimating second-quarter net income of 3 cents to 5 cents per diluted share. In April, AMD forecast second-quarter sales could fall by as much as 10 percent. Last week, AMD cited weaker-than-predicted demand for flash memory devices and competitive pricing in the PC processor market for sales slightly less than expected. However, AMD said it still achieved record unit sales of AMD Athlon and AMD Duron processors, and record aggregate PC processor unit sales. AMD will release its second-quarter financial results July 12.