Hello,

When looking at yahoo finance I noticed that ANSYS and esi-group shares where going down despite the merger with fluent:

http://finance.yahoo.com/q/bc?s=ESI....z=m&q=l&c=ANSS

how do you analyze this?

Some communication informs that profits are also down. Most likely because some top manager are smirking in the boardroom while receiving wages they don't deserve.

On the other hand research institutes tops up their income well by combining serious research with partnership with industry.

For example: flashing liquids:

http://cordis.europa.eu/fetch?CALLER...41429&RCN=2723

Soot modeling:

http://cordis.europa.eu/fetch?CALLER...41429&RCN=2436

Wake modeling for road vehicle:

http://cordis.europa.eu/fetch?CALLER...041429&RCN=840

Coal combustion:

http://cordis.europa.eu/fetch?CALLER...041429&RCN=738

How would you interpret this?

Comparing Ansys shares to the NASDAQ index shows that the Ansys share has beaten the index most of the previous years. For example, over the last 5 years the Ansys share rose with almost 300%, whereas the NASDAQ index didn't rise with more than 30%. Over the same period Ansys earnings have risen more than a factor of two. Ansys has a fairly high P/E number and hence is valued as a high-growth technology stock with a lot of risk/potential.

Over the previous year growth in the Ansys stock has not been that fantastic though, it has matched the NASDAQ index I think. Also revenues have been fairly flat. I think that one of the reasons for this it the acquisition of Fluent. Fluent had a lower operating margin than Ansys before the merger. Also, in November 2006 almost 9% of the Ansys stockd were sold due to the merger with Fluent.

I think that it is diffuclt to make any judgements about the CAE and CFD market just by looking at the Ansys stock over the last year. Ansys has made a major merger with Fluent, a large part of its stocks have been sold due to this merger and the valuation of the stock is difficult to compare with previous years since Fluent was not on the stock exchange before the merger.

You wrote "ANSYS and esi-group shares where going down despite the merger with fluent" which implies that ANSYS acquired the ESI-Group. To the best of my knowledge they haven't. Did you mean CFX? Or have I missed some news?