Autodesk Poised For Recovery

from The Street

Autodesk's AutoCAD is the dominant software brand for architetural CAD drafting and building design, with over 9 million users of its flagship software.

Over the last decade, the San Rafael, Calif., company has virtually vanquished its competitors in this market, and in Autodesk training, including privately held Bentley Systems.

Autodesk was founded in 1982 by John Walker, one of the authors of AutoCAD. Together, with a band of co-founders who helped commercialize the product, Autodesk became the leading PC-based application for architectural drawings. The company came public in 1985, offering 1.6 million shares at $11 per share.

Best known for its AutoCAD software package, Autodesk's applications stretch across building design. Civil engineering accounts for an estimated 55% of sales, mechanical product design as much as 25% of revenue, and video editing and animation for the entertainment and video game markets, the remaining 20% of sales.

We have been concerned for some time about Autodesk's exposure to the architecture, engineering and construction (AEC) sectors, which have dramatically reined in their spending on automation and IT services in the last year.

However, company revenue appears to have stabilized at an annual clip of about $1.6 billion, down from the $2.3 billion that it recorded in calendar 2008. While we are not predicting a quick snapback to previous revenue levels, the company is poised to participate in a global recovery, should there be a pickup in software spending and Autodesk education in the economically sensitive customer segments that it serves.

Most of Autodesk's revenue stems from PC-based software, and the company should be a beneficiary of the Microsoft Windows 7 upgrade cycle. Microsoft's(MSFT Quote) long-awaited new operating system, Windows 7, addresses many of the shortcomings of Microsoft's Vista, which was its first operating system debacle in many years.

Our view is that pent-up demand exists for Windows 7, because many businesses have delayed purchases of new computers and software, due to Vista's shortcomings, as well as the general economic malaise. The Windows upgrade cycle should drive an upgrade cycle for PC software developers, such as Autodesk, whose products run on Windows 7. Autodesk recently announced that nine of its products, including its mainstream AEC and mechanical desktop products, now support Windows 7.

Finally, a weak dollar will benefit Autodesk because over 60% of its sales come from outside of the U.S. Recent surveys also show that home and kitchen remodeling are experiencing a boom.

While it will be several quarters before Autodesk begins to show growth, revenue has stabilized, the company has exposure to the Windows 7 upgrade cycle and derives more than half of its revenue from overseas markets ---all of which bodes well for the future.

Business Week 50: The Journal's Annual Listing Of Best American Companies
Originally Posted at BusinessWeek.com

As our 13th annual ranking of the BW 50 shows, innovation is still alive and well—vital, even—among America's largest companies

Nestled in the rolling hills just north of San Francisco, Autodesk is no Silicon Valley mover and shaker. The company is known mostly among engineers as the maker of the 3D software programs used by everyone from Hollywood animators to the architects designing the newest Manhattan skyscrapers. But Autodesk's bigger contribution to the U.S. economy may not be its role in such movies as Kung Fu Panda or the latest Indiana Jones epic. Rather, it's in helping manufacturers scattered across the Rust Belt compete against foreign rivals.

Consider the experience of Hardinge (HDNG), a machine tool maker in Elmira, N.Y. After watching many of its U.S. rivals go bankrupt—their equipment unbolted and shipped abroad for use by companies in Japan, Taiwan, and South Korea—Hardinge employed Autodesk as part of its survival plan. The software maker's engineers developed a customized set of 3D programs that enabled Hardinge to design and build a highly sophisticated lathe with 5,000 parts in as little as five months, roughly a third of what it took a decade earlier. That helped the $345 million company survive, turning a profit in four of the past five years. Autodesk's software "allows us to go from concept to finished machine much faster, and that's helped us stay competitive," says Richard L. Simons, Hardinge's president and chief executive.

Autodesk exemplifies many of the companies in this year's BusinessWeek 50, our 13th annual ranking of the best-performing companies in the Standard & Poor's 500-stock index. While each list invariably includes companies that rode the wave of powerful industry cycles—such as this year's four energy companies—many more, like Autodesk, earned their spot in the BW 50 as innovators. They created products or services dramatically better and cheaper than anything offered by rivals. "These companies are what I call the 'disrupters' of the economy," says Harvard Business School professor Clayton H. Christensen, an innovation expert. Autodesk training in the use of its cutting-edge design software, for example, have helped the makers of everything from appliances to cars to prosthetic limbs take on entrenched rivals with greater resources.

This year's BusinessWeek 50 is chock-full of companies that changed the rules of engagement in their industries. At Nucor (NUE) (No. 20), experimental technologies and cutting-edge compensation revolutionized steel manufacturing—and may help explain why the company is holding up despite tough times. IntercontinentalExchange (ICE) (No. 17) and its electronic futures market brought greater price transparency to energy trading, and the company is now blazing a new trail by launching one of the first clearinghouses for complex credit default swaps. Occidental Petroleum (OXY) (No. 43) has relied on advanced technology to wring more production out of its oil fields in Texas and is now doing the same in Libya. Laparoscopic tools from Intuitive Surgical (ISRG) (No. 41) have shortened the recovery period for many surgery patients and could in time dramatically reduce the number of beds the nation's surgical hospitals need. "This technology has potentially profound implications for the health-care system," says Intuitive Chairman and CEO Lonnie M. Smith.

And then there's this year's No. 1, Gilead Sciences (GILD). The Northern California biopharmaceutical company scored a huge success earlier this decade when it sensed an opening for HIV drugs that were simpler and cheaper than standard treatments, which required patients to pop dozens of different pills throughout the day. Gilead's researchers responded with a new manufacturing process allowing them to produce compounds of several drugs to be released into the bloodstream at different times. The result was a daily-dose pill that replaced the old drug cocktails for a fraction of the cost. Now the company is going after another big market: patient-friendly treatments for hepatitis C, a chronic liver disease that affects 170 million people worldwide.

Disruptive technologies and strategies may be a key tool for companies in periods of economic and industrial stress, like the current one. That's because recessions are historically times when companies make the biggest competitive strides—or fall behind. A 2002 survey by McKinsey of the performance of 1,000 companies during an 18-year period found that those that made the biggest leaps in profitability were often the ones that increased their spending on acquisitions and innovation the most amid recessions. It was during the 2001 recession, for example, that Apple began marketing its first iPod and IntercontinentalExchange expanded its energy trading platform with a key acquisition.

OLD AND STILL INNOVATIVE

Given the carnage on Wall Street and in the economy, you might expect considerable turnover in the BusinessWeek 50. While some notable companies dropped off this year—for instance, UnitedHealth Group (UHH), No. 14 in 2008—the 2009 list includes a surprising number of return performers. Among the Class of 2009, 33 companies were repeats from last year's ranking, the largest number in the history of the BW 50.

The Class of 2009 also demonstrates that companies don't have to be startups to be innovative. Colgate-Palmolive (CL) (No. 5), Coca-Cola (KO) (No. 26), and Northern Trust (NTRS) (No. 49) stand out for their innovative spirit, even though their roots extend as far back as the 1800s. In most instances, these companies overcame difficult times by refreshing the values that made them great in the first place. In the case of Coca-Cola, that meant finally embracing the change in consumer tastes—and marketing niche brands, such as vitaminwater and its Dasani water, with the same commitment as it does its flagship cola. "Coke refutes the theory that all successful companies grow old and then disappear at some point," says management consultant Jim Collins. "They took their brand image—wholesomeness and friends and family—and applied it to new categories."

If there's another trait common among this year's BW 50 companies, it's that a good number have developed pay-for-performance cultures. At Nucor, IntercontinentalExchange, Fastenal (FAST) (No. 19), and Expeditors International of Washington (EXPD) (No. 28), employee salaries are nothing special—and in some instances they are below average for their sectors. But each of those companies supplements miserly salaries with generous incentives based on such metrics as profits and customer satisfaction.

Consider Fastenal, a distributor of nuts, bolts, and 49,000 other tools and parts used by industrial customers. Given the commodity nature of its products, Fastenal works hard to guarantee its costs are the industry's lowest. To encourage employees to act like owners and shave every penny possible out of its cost structure, Fastenal pours 10% of all profits above a preset level each year into bonuses and 401(k) contributions. That ensures managers don't grumble about the companywide ban on secretaries. Employees willingly share hotel rooms and forgo meal reimbursement on business trips because they know that part of the savings will flow back into their paychecks. "The benefit of this frugality is that it forces everyone to always look for ways to change, to improve every single thing you do," says Fastenal CEO Willard D. Oberton.

All these companies know there's no guarantee of success. Look through this year's rankings, and you'll see a number of current high achievers at risk of seeing their franchises disrupted by upstart rivals. For Starbucks (SBUX) (No. 32), the threat is coming from McDonald's (MCD) and Dunkin' Donuts, which are undercutting the coffee giant on price. For Microsoft (No. 8) (MSFT), the spread of cheap—or even free—Internet applications offered by Google (GOOG) (No. 35) is threatening its hegemony over the desktop computer. And Best Buy (No. 9) is seeing its CD and video franchise threatened by the digital downloading services run by the likes of Amazon and Apple. But these challenged companies have a history of rising to the occasion and may prove that they can be innovative—and disruptive—players once again.

See the full 50 Scorecard

Autodesk Unveils Its First U.K. Partner For Topobase
Originally Posted at Channel Web



Vendor Autodesk has unveiled 1Spatial as the first UK VAR to sign up to sell its Topobase spatial data management software.

Topobase is built on Autodesk's AutoCAD Map3D and MapGuide software and sits on an Oracle Spatial database. It already has a 500-strong global customer base and Autodesk is now targeting success in the UK utility market.

Tracey Stone, Autodesk's infrastructure modeling sales manager for northern Europe, claimed 1Spatial's geospatial nous earmarked it as an ideal partner.

“1Spatial already has years of experience in integrating computer-aided design (CAD) and geographic information system (GIS) and working with AutoCAD Map 3D and MapGuide, helping customers reduce costs and increase efficiencies," she said.

“This new move further strengthens our partnership with 1Spatial and reflects Autodesk’s policy of extending the specialist knowledge and value-added services available to customers in this area.”

1Spatial's business development director Graham Stickler claimed his firm had inked the UK reseller agreement after enjoying success in Australia. "UK utilities are currently under pressure from all angles; from government, regulatory authorities and from customers themselves, to streamline processes and become more efficient," he said.

"More flexible and agile business systems are obvious goals at such a time, and the integration of CAD and GIS into the key business processes can provide real and immediate benefit. With an impressive and already proven ROI, we believe it is, therefore, a very appropriate time to launch Topobase into the UK market."

To talk to an industry leader in Autodesk training, visit Avatech.