Altium Shareholders Laugh Last, Laugh Best

Shareholders in Altium who have stuck with the company this year are entitled to a solid chuckle when they view the latest quarterly results for its one-time US suitor Autodesk.

Remember how Altium was criticised by shareholders and analysts for rejecting Autodesk’s suggested offer of ‘around $40’ per share (which eventually became $38.50 and then a rumoured top up to $40) in May and June?

The Autodesk approach saw Altium shares leap to a then high of $37.80 as hedge funds and punters poured into the stock in hopes of a contested bid or higher price.

Autodesk wanted Altium to add its software and other design products to its huge suite of CAD (computer aided design) products.

What they didn’t bank on was the immediate rejection by Altium directors and managers and the hard line maintained in the face of pressure from those punters and others for the company to negotiate with the American giant for a higher price and deal.

Autodesk eventually dropped the bid idea in mid-July and walked away.

Since then Altium and those shareholders who remained loyal have prospered.

Altium shares may have dropped more than 11% to a low of $31.47 the day Autodesk’s decision to walk was announced but after that slide they picked themselves up and peaked on November 19 at an all-time high of $43.18.

They closed Thursday at $41.67, still well above the Autodesk price.

In August, Altium lifted dividend and guidance for the 2021-22 year after a strong second half of 2020-21. The now expects revenue for FY 2022 to grow 16% to 20%.

This would represent revenue of $US209 million to $US217 million and the annual meeting last week saw the company tell shareholders it was on track to achieve that raised target.

Altium’s CEO, Aram Mirkazemi, told the meeting the company was on track to achieve its guidance in FY 2022: “We are set to achieve our fiscal 2022 guidance of 16-20% revenue growth and we are powering our growth engines of CAD, Cloud and Digital Bridges to not only dominate but to transform the electronics industry.”

And Autodesk?

Well, on Wednesday its shares slumped after it barely met third quarter guidance and produced a weak outlook. The shares slid 17% at one stage.

It reported revenue of $US1.26 billion, a little better than the market’s $US1.12 billion. Earnings were $US193 million, compared to $168 million in the third quarter last year. The operating margin was 17%, down 1 percentage point. The market had been looking for a little less that the reported income figure.

But a big worry was the 24% slide in cash flow to $US257 million. The guidance for the 4th quarter was light on, and analysts said that while the company should meet full year (December 31) guidance, the final six months of the year (when it would have been tucking Altium into its balance sheet and making things look a little stronger) have been weaker than expected.

Autodesk is priced at 100 times earnings, and as one analyst remarked this week, the company is ‘priced for perfection’ which doesn’t allow of many errors or weak reports.

Autodesk shares were trading around $US274.70 when its bid for Altium was announced in June 6. They ended at $US256.90 on Wednesday, down more than 15% on the day by the close. They also touched a 52 week low in trading of $US245.05.

Altium shares were trading around $A27.21 just before the offer was revealed in early June, meaning Wednesday’s close was a gain of more than 50%.

The winners – by a mile – loyal shareholders and managers and the board of Altium who knew the company better than those in the markets talking through their positions.


About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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