I am taking a look at a couple of the engineering software stocks, and a review of recent conference call transcripts can frequently be a good place to start.
Ansys (ANSS) provides software that simulates physical forces such as turbulence, heat and pressure. Seldom was heard a discouraging word on that call, and for good reason. The closest I could come to was:
So even as we increase our outlook this will also be tempered of course by our short term engineers' paranoia which I have to say has also served us well."
(Excerpt from full ANSS conference call transcript)
Dassault Systemes (DASTY) has simulation and 3D design, plus software to help companies manage the product life cycle. It, too, has been on a tear for the past few years, and is showing no signs of stopping.
One of our most visible initiatives is the successful transformation of our PLM channel. Looking at the quarter, we had good progress in the PLM value channel and with IBM in large accounts. Our results today demonstrate that we are well in line with our plans, driving growth for CATIA and ENOVIA.
CATIA performed well with both large accounts and mid-market. We continue to invest in strengthening and broadening the CATIA product line. In mid-June, we completed the acquisition of ICEM, expanding our presence at the front-end of design. ENOVIA's strong results demonstrate that our products form a powerful combination and are clearly complementary.
In total, we have had a dynamic product release schedule during the 2007 first half. We continue to advance our technology and strategic roadmap. During the second quarter, we launched our newest brand, 3DVIA, whose goal is to enable 3D to become a universal media for online product experiences.
(Excerpt from full DASTY conference call transcript)
Parametric (PMTC) has much in common with Dassault. Except for the being on a tear and showing no signs of stopping, that is.
We are disappointed with our performance in other areas. Most of the revenue shortfall was in license revenue. Our Desktop Solutions revenue declined year-over-year, which is counter to our recent trend of strong growth in this line of business.
The performance was spread across Pro/ENGINEER new seats, modules, and upgrades, with the most significant change from recent quarters in upgrade and module sales. By geography the revenue weakness was concentrated in North America and Japan.
(Excerpt from full PMTC conference call transcript)
The next question, of course, is to determine whether the successes at Ansys and Dassault are priced in, or whether Parametric has taken enough of a beating to be worth taking the risk.
Disclosure: Author is long IShares MSCI Japan Index (EWJ) at time of publication.