Autodesk’s Manufacturing Sales Plumb New Lows

excerpted from

by CAD/CAM Publishing

November 21, 2002 - On November 4, Autodesk told investors that sales would miss previous forecasts and that it would report a loss in the fiscal quarter that ended October 31, 2001, the third of its fiscal year. What Autodesk didn’t say in the earlier announcement is that sales of its manufacturing division, maker of the Inventor Series software, would plunge 12 percent year-over-year and 26 percent compared to the second quarter.
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Autodesk’s chief executive, Carol Bartz, told analysts in a phone call that most of the manufacturing division’s shortfall came from declining sales of its two-D CAD product (AutoCAD Mechanical). Bartz said sales of the Inventor Series software (which includes Inventor, Mechanical Desktop, Mechanical, and AutoCAD in one package) rose three percent compared with last year’s third fiscal quarter. Inventor sales fell sequentially in all geographic regions.

Bartz speculated that late deliveries of Inventor Series version six may have contributed to the decline. Shipments didn’t begin until October, and products didn’t reach the large overseas markets of Germany and Japan until three days before the quarter ended, Bartz claimed. Autodesk announced the new release in August, and Bartz suggested that many customers postponed purchases until it arrived. As evidence, she noted that Inventor sales fell only five percent sequentially in the U.S. where Inventor version six has been available for several weeks. Inventor sales fell “much more” in other nations, Bartz said.

Rival SolidWorks reported a six percent sequential sales decline (in U.S. dollars) in the third calendar quarter of 2002, suggesting the market for moderately priced solid modeling software is not strong right now. Had Autodesk been able to deliver its latest product outside the U.S. before the quarters end, Inventor’s sales decline might have been no worse than SolidWorks. The proof will come if Inventor can match or best SolidWorks sales trends in the current quarter, which is usually strong for both companies.

Bartz claims that sales of AutoCAD Mechanical collapsed because manufacturers are worried about the weak economy. She says Inventor is winning in competitive evaluations, although every CAD CEO says that.

Autodesk claims it delivered 6,100 seats of the Inventor Series software in the quarter. The manufacturing division’s revenues were $24.6 million, the lowest ever reported.
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Autodesk has reported weak third quarters in the past, only to come roaring back when it delivered a new AutoCAD release. The next AutoCAD is currently in prerelease testing, although Autodesk doesn’t expect shipments to begin until its next fiscal year. Bartz emphasizes (correctly) that the company generated positive cash flow in spite of losses and that that it has no debt. These conditions give it time to tinker with products and sales strategies. “I feel better about where we are than you would think from the numbers,” she told analysts.