That issue could make Synopsys more vulnerable than other companies that have found themselves in activists’ cross hairs, such as Mentor Graphics, which was subject to a campaign by corporate raider Carl Icahn several years ago. And the source pointed out that while EDA companies generate consistent growth, they’re not in an explosive sector. “That has been their strategy.”Īnother industry source pointed to potential issues with management compensation at Synopsys, asserting that “management pays themselves like crazy.”Īccording to the source, management pays itself 22.5% of net earnings in stock-based compensation, whereas Intel Corp.’s (INTC) management, in contrast, takes only 7%. earlier this month.“They are more active on the acquisition side than on the dividend side,” said Sanganeria. Synopsys has sealed three deals this year alone, agreeing to acquire Codenomicon Oy in April, Quotium Technologies SA’s application and data security solutions in May and Atrenta Inc. However, Synopsys has been using its cash to make acquisitions, expanding into new segments such as security software that removes virus or spyware. “It has been that way for several years,” said RBC Capital Markets LLC analyst Mahesh Sanganeria.

With so much cash and so little debt, this person said, activists could push the company to leverage up its balance sheet and pay dividends. “If Synopsys starts meeting quarters, activists would be all over.” “They have a lot of cash now, and the company is viewed as a thought leader in the EDA space with Cadence being the close second,” said an industry source who asked to be unnamed. Synopsys currently only has $220 million in debt but $1 billion in cash and equivalents, according to Bloomberg data. was once among the market giants, but Synopsys acquired its smaller rival in 2012 for $507 million. (MENT) dominate the EDA space, each having a market capitalization of about $7.8 billion, $5.8 billion and $3.2 billion, respectively.

Mountain View, Calif.-based Synopsys makes electronic design automation, or EDA, software that designs integrated circuits, or chips.

(SNPS) cements its position as a leader in the chip design software space, the tech giant could end up catching the attention of activist investors, according to company watchers. To use cash toward a dividend and address management compensation byĪctivists - “management pays themselves like crazy.”Īs Synopsys Inc. Followers say the Mountain View, Calif., chip design software maker could be pushed

Synopsys acquisitions