QUOTE AND NEWS
Cloud Computing  Dec 8  Comment 
The Internet of Things (IoT) is rapidly in the process of breaking from its heretofore relatively obscure enterprise applications (such as plant floor control and supply chain management) and going mainstream into the consumer space. More and more...
TechCrunch  Dec 1  Comment 
 The boxed copy sales model for professional software is dead, and increasingly companies are realizing that charging certain customers at all doesn’t make much sense. Microsoft figured it out, and Autodesk is expanding the pool of people who...
Benzinga  Nov 25  Comment 
CNBC Fast Money's Jon Najarian said on the show that he noticed an unusual options activity in Autodesk, Inc. (NASDAQ: ADSK). Najarian explained that the stock traded approximately 12.5 percent higher over the last month, but the call options in...
Benzinga  Nov 21  Comment 
Natural Grocers by Vitamin Cottage Inc (NYSE: NGVC) +20% - Shares are up sharply following the company’s positive fourth-quarter results and slightly raised FY2015 EPS guidance. Autodesk, Inc. (NASDAQ: ADSK) +7% - On Thursday, the company...
Forbes  Nov 21  Comment 
In early trading on Friday, shares of Autodesk (ADSK) topped the list of the day's best performing components of the Nasdaq 100 index, trading up 6.8%. Year to date, Autodesk registers a 24.0% gain.
Benzinga  Nov 21  Comment 
In a report published Friday, Bank of America analyst Kash Rangan reiterated a Neutral rating on Autodesk, Inc. (NASDAQ: ADSK), and raised the price target from $62.00 to $63.00. In the report, Bank of America noted, “ADSK beat revenue and EPS...
TheStreet.com  Nov 21  Comment 
NEW YORK (TheStreet) -- Barclays raised its price target for Autodesk to $70 from $65 Friday, reiterating its "overweight" rating. Shares of Autodesk were gaining 3.6% to $60.50 in pre-market trading. Despite raising its price target, the...
Benzinga  Nov 20  Comment 
Autodesk, Inc. (NASDAQ: ADSK) reported financial results Thursday for the third quarter of fiscal 2015. Revenue was $618 million, above estimates of $601.88 million, an increase of 11 percent, compared to the third quarter last year as reported...




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Autodesk (NASDAQ:ADSK) sells Computer Aided Design (CAD) software, which is used by engineers and architects to mock up designs for products and buildings. While Autodesk's competitors sell advanced software with a $10,000 price tag to niche audiences, Autodesks's "AutoCAD" sells for a relatively modest $4,000, making it the de facto standard with 85% market share. The software's price means AutoCAD is the only option for smaller firms - a market the company's competitors have only recently begun to target.

Autodesk's large customer base (at 85% market share more than 8 million AutoCAD users) is itself a competitive advantage. CAD software is technical and tricky to learn, and therefore switching costs are high. As the defacto standard, most new professionals who need to use CAD software learn AutoCAD. This represents an enormous advantage for ADSK, as competitors will find it difficult to break through this standard.

The company has grown revenues by convincing customers to switch to a subcription model for AutoCAD software. In this model, customers get automatic updates and new features in exchange for a recurring fee. The model is much more profitable for Autodesk - only 22% of Autodesk's customers buy software in this way, but they account for nearly half of the revenues.

Company Overview

Since 2003, Autodesk has shown constant growth in their revenues and kept the same hold on the market. AutoCad happens to be the standard in the market, primarily because it takes time to unlearn the design software and learn a new standard. Moreover, Autodesk has traditionally focused on the mid market segment,the largest segment in the market, whereas their nearest competitors have been focusing on the higher end segment. The company has focused on converting their customers to a subscription plan as well, so that they can make more revenue per client.

Trends and Forces

Industry wide Transition from 2D to 3D

Autodesk is trying to increase the adoption of “next generation” 3D software products as compared to the 2D market. It recognizes that the 3-D segment would be a key driver for growth for the company in the future. This would definitely provide Autodesk with the opportunity to up-sell its massive 2-D installed base into higher average sales price (ASP) 3-D software and to boost growth.

Dominance of AutoCad in the market

Competitors in 2-D CAD are quite small, with none exerting significant independent threats to Autodesk’s position. AutoCad and AutoCad LT continuously drive up the sales for the company. They are touted to be the “crown jewels” of Autodesk, accounting for approximately 44% of revenue and 36% of licensing revenue last fiscal year. Until now, the products have doing well in the market. However, an increasing focus on this segment by their competitors, namely UGS who is commoditizing its 2-D software and allowing users to download it online, highlights a trend that might catch on in the future, and prove harmful to Autodesk.

Piracy and Counterfeiting problem

One of the major problems faced by many IP holding companies is the issue of their products being copied and being sold for a cheaper price in the markets, more so in the developing world(see concept: China's Piracy & Counterfeiting Problems). Since the country is unable to safeguard the Intellectual Property rights of many companies, Autodesk happens to be one of those to be hit by such infractions as imitators come up with cheaper versions of their products.

Slowing US economy

Autodesk has become increasingly subject to the risks arising from adverse changes in domestic and global economic and political conditions. As economic growth in the United States and other countries slows down, many customers may delay or reduce technology purchases. Since Autodesk controls a lions share of the market, they would be more prone to the market changes in US.

Competition

Autodesk controls over 85% of the market, primarily because of the fact their competitors have been focusing on a more premium market segment. Recently, Dassault and UGS have made forays into the mainstream or mid-market with product level CAD software selling in the $4,000-$5,000 per seat range, which is Autodesk’s core market.

A comparison of the sales of CAD units for the main competitors portrays Autodesk's position in the market. Competitors in 2-D CAD are quite small, with none exerting significant independent threats to Autodesk’s position.

However, one of the main development in this market has been, UGS (Siemens) has indicated that there have been over 33,000 downloads of the Solid Edge 2- D drafting tool in the four months since its introduction. While the number of downloads does not pose any major threat, UGS’s decision reflects a belief by some that basic 2-D tools will become commoditized and could be given away for free in an effort to help drive 3-D adoption.

Notes

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