Ansoft Corporation

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Ansoft Corporation

4 Station Square, Suite 200
Pittsburgh, Pennsylvania 15219-1119
U.S.A.
Telephone: (412) 261-3200
Fax: (412) 471-9427
Web site: http://www.ansoft.com

Public Company
Incorporated: 1984
Employees: 285
Sales: $47.3 million (2003)
Stock Exchanges: NASDAQ
Ticker Symbol: ANST
NAIC: 511210 Software Publishers

Ansoft Corporation is a Pittsburgh, Pennsylvania-based developer of electronic design automation (EDA) software, used by electrical engineers in the design of such products as cellular phones, internet networking, satellite communications systems, computer chips and circuit boards, and electronic sensors and motors. EDA software is a modeling tool that can be used throughout the design process—logic design and synthesis, design and analysis, and physical design and verification. As a result, physical prototypes are not needed, product performance is maximized, and the time to market is greatly reduced. Ansoft's products fall into three market categories: high-frequency software, a three-dimensional electromagnetic field simulator for high frequency, radio, frequency, and wireless product design; signal integrity software, used to analyze printed circuit boards, components, and combinations of these structures; and electromechanical software to produce an accurate representation of electric or magnetic field behavior. Ansoft also offers add-on modules that link the company's products to popular design software programs. Ansoft sells its products on a global scale to the communications, semiconductor, automotive/industrial, computer, consumer electronics, and defense/aerospace industries. Major customers include Boeing, Cisco, Ericsson, Ford Motor, General Motors, IBM, Intel, Motorola, NASA, Sony, and Sun Microsystems. Ansoft maintains North American sales and support offices in Arizona, California, Florida, Illinois, Massachusetts, Michigan, New Jersey, Ohio, Pennsylvania, Texas, and Wisconsin. To serve the Asia-Pacific market, Ansoft maintains sales and support offices in China, Japan, Korea, Singapore, and Taiwan. In Europe, Ansoft operations are found in Denmark, England, France, Germany, and Italy. Ansoft is a public company, trading on the NASDAQ.

Founding the Company in 1984

Ansoft grew out of research conducted at Pittsburgh's Carnegie Mellon University by Ansoft's chairman and chief technology officer, Zoltan J. Cendes, and his colleagues. After earning an M.S. and Ph.D. in electrical engineering from McGill University in Montreal, Canada, he went on to work for General Electric Corporation (GE), initially involved in the large steam turbine generator division and later responsible for the development of finite element computer codes in GE's corporate research and development center. He returned to McGill University in 1980, taking a position as Associate Professor of Electrical Engineering, and two years later joined the faculty at Carnegie Mellon. Cendes and his colleagues conducted important research that would make finite element modeling practical for electrical engineering. Soon their research partners, who provided the funding, requested that they develop commercial software tools to put their research to practical use. Thus, with no product, no organization, and just a vision, Ansoft was born in 1984. Its founders were Cendes, his brother Nick Csendes (who retained the original spelling of their last name), Thomas A.N. Miller, and David Shenton. Nick Csendes, a non-scientist, was instrumental in helping to arrange the funding to launch the business. He had 15 years of investment experience and had helped to establish start-ups in Boston and Houston. Finding seed money in Pittsburgh, however, proved to be a difficult task. Recalling those early days, Csendes told the Pittsburgh Post-Gazette in 2002, "I talked to every banker in town . . . I know that if I had a steel plant, they would have lent me money. But because I was in software, I couldn't get a penny."

Introducing the First Product in 1986

Ansoft was able to scrape by until 1986 when it introduced its first product, a 2-D Field Simulator, which was called Eddy because it computed Eddy currents in AC conductors. Compared with later developments made by the company, it was a crude program. Nevertheless, it was a much appreciated new tool for electrical engineers, allowing them to conduct "whatif" analysis on product designs. Factors such as size, material properties, and excitation levels could be factored together to determine electromagnetic field simulation. Eddy was followed by two-dimensional microwave simulation programs. Ansoft's cutting edge work was so respected in its field that in 1989 Hewlett-Packard (HP) asked the company to help in developing a three-dimensional finite-element simulator. HP's customers had been clamoring for an alternative to traditional test-and-measure instrumentation in the hope of cutting down product development time. According to Csendes, "We [looked] upon that as a very important milestone for the company. It reinforced the value of our product and made us aware of the real market potential. That is when the company took off." The HP alliance also moved Ansoft into higher-frequency design, which was a difficult area in which to work. As Zoltan Cendes explained to Microwaves & RF in a 2001 interview, "At that time, solving high-frequency electromagnetic problems using finite elements often resulted in unphysical spurious modes. This was a severe limitation, and presented us with a great challenge, We invented procedures to avoid these problems, which made it possible to solve three-dimensional electromagnetic field problems using finite elements for the first time. . . . The culmination of our work was the software program HFSS, which was the first commercial program that could simulate complete three-dimensional geometries. After we finished the initial software development, HP marketed the product exclusively for us. We began shipping the product in 1990." A key to Ansoft's breakthrough in the development of the software program—called HFSS, or High-Frequency Structure Simulator—was a dramatic improvement in computer hardware performance with no increase in cost at this time. As a result, the company was able to solve three-dimensional problems without imposing unrealistic costs.

In 1990 Ansoft reported sales in the $2 million range. By mid-1991, Ansoft employed 38 people and maintained sales offices in Pittsburgh, Boston, and Los Angeles, with the capability of distributing its products to Europe as well as the Pacific Rim. The company began to expand in a number of ways. It acquired Parametric Integrated Circuits Inc., a Tempe, Arizona-based company that had developed electronic circuitry-packaging design software. The deal combined Ansoft's work on electrical systems analysis with Parametric's electronic package design technology, which led to software that could help in computer circuit board design. Because circuit boards were becoming ever more powerful, relying on smaller computer chip packages, designers were faced with a problem of "cross talk," as electronic impulses from one chip spilled over to interfere with a neighboring chip. The Parametric acquisition then led to an agreement with Motorola Inc. to aid in the design of new software to help in the development of semiconductor products by speeding up the design of complex integrated circuits.

In 1992 Ansoft launched a new software product, Maxwell Spicelink, which represented a departure for the company. Instead of marketing to a broad range of design engineers in a variety of industries, Ansoft now looked to target a specific market, in this case, electronic design engineers. Spicelink essentially combined Ansoft's electro-magnetic-field-simulation technology, marketed under the Maxwell name, with SPICE, an established software program used to design and simulate electronic circuits. Spicelink allowed designers to simulate performance of a product without having to actually build a prototype. Because electronics were changing so rapidly, the ability to simulate performance before going to market was becoming of paramount importance. Not only would time be saved, but functionality could be maximized, which could very well be the key to the product's success with consumers.

Completing an Initial Public Offering in April 1996

During the early 1990s, Ansoft grew steadily, as management prepared to take the company public. Revenues totaled $3.47 million in 1993, $5.1 million in 1994, and $6.15 million in 1995. The company was still losing money but was on the verge of becoming profitable. In 1996 Ansoft, which by now had established sales offices in Japan and England, was ready to make an initial offering of stock to the public. It was completed in April 1996, netting some $12 million for the company. A few months later, Ansoft used some of those proceeds to make an acquisition, paying $5.6 million in cash to buy MacNeal Schwendler Corporation's electronic business unit, thereby adding products to complement Ansoft's line of electromechanical analysis software programs. For the fiscal year, the company recorded revenues of nearly $8.7 million and a net profit of $1.3 million. It was also during this period that Ansoft's relationship with HP soured, as the two companies differed on how to develop HFSS. They became competitors, as HP, and later an HP spinoff named Agilent Technologies, vied for supremacy in the 3D electromagnetic modeling market.

Company Perspectives:

Our Mission: To lead the high-performance segment of the EDA market by leveraging electromagnetics across component, circuit and system design.

Ansoft continued to grow its customer base through acquisitions in the second half of the 1990s. In April 1997 it completed the purchase of Compact Software Inc., a move that added a full line of RF and microwave circuit-design tools and filled out Ansoft's wireless solution suite. Next, in August 1997, Ansoft acquired Boulder Microwave Technologies Inc. at a cost of $1.5 million in cash and stock, as a result adding a simulator for printed microwave circuits. In June 1998, Ansoft grew internationally, acquiring the South Korean assets of Jason Tech Inc., which led to the creation of Ansoft Korea. Jason Tech had served as the distributor of Ansoft products in South Korea since 1991. Also in 1998, Ansoft expanded its European presence by opening a sales office in Paris to serve France, Belgium, Portugal, and Spain. The final acquisition in the decade came in April 1999, when Ansoft completed the $3.2 million purchase of Pacific Numerix, Inc., a Scottsdale, Arizona, company that developed a suite of integrated tools for signal integrity simulation. With this addition in technology, Ansoft now offered designers much greater expertise in electrical design validation. As a result of these acquisitions, Ansoft was able to improve revenues to $24.5 million in 1999.

In 2000 Ansoft elected to change its business model, forming a pair of ventures to pursue niche opportunities while it focused the core business on higher growth markets. First, it spun off Altra Broadband Inc. to focus on the development of new hardware technology to increase the speed of broadband wireless and optical communications products. By making Altra a separate business, Ansoft hoped that the new company could attract its own outside financing. Ansoft planned to remain in the wireless and optical market, but only as an engineering software company. Later in 2000, Ansoft created Automotive Product & Technology Solutions to concentrate on the automotive industry and the electronic and electromechanical systems it employed in its vehicles.

Ansoft completed a pair of significant transactions in 2001. Early in the year it bought SIMEC GmbH & Co. KG, a German company that made software to assist automobile designers in modeling. In July 2001 Ansoft announced that it would purchase Agilent's HFSS product line. In effect, Agilent and HP agreed that Ansoft's approach to HFSS was better and the former strategic partners were once again working together. Agilent customers would now be transitioned to Ansoft solutions by way of translators that would automatically convert Agilent 2-D and 3-D models to the Ansoft format.

With the restructuring of its business model complete by early 2001, Ansoft hoped to improve its standing on Wall Street. Despite a general crash in the tech sector, Ansoft continued to show steady growth in revenues, which totaled $33.5 million in 2000, $43.6 million in 2001, and $53.4 million in 2002. For the most part, however, the company was operating at a loss. Only in 2002 did Ansoft record a net profit ($1.2 million). Moreover, Ansoft's efforts to sell telecommunications hardware through Altra Broadband were discontinued. With telecoms mired in a prolonged slump, there was simply not enough investment in this area to sustain the business. As a result, in September 2002, Ansoft announced that it would close Altra's Irvine, California, office and lay off some 20 people. Another 20 Ansoft employees also were laid off. Altra's Boston office and its ten people would not be affected, because that group was working on technology that could contribute to Ansoft's core software business.

Ansoft's revenues fell to $47.3 million in 2003 while the company posted a $3.1 million loss. On the positive side, Ansoft finished the year strong and was positioned to enjoy growth in the 10 to 15 percent range in 2004. With the economy improving, there was good reason to believe that Ansoft, a leader in its field, would resume its long-term pattern of growth.