CoWare, targeting system design, plans IPO

K.C. Krishnadas
(01/05/2005 9:29 AM EST)   BANGALORE, India — Tool vendor CoWare, Inc. said it plans an initial public offering this year to raise funds for more R&D investments and to expand its global reach.

"We want to be the largest public company in the electronic system level [ESL] space. We expect to do an IPO in the next 12 months," said Alan Naumann, president and chief executive officer of Coware (San Jose, Calif.).

The company expects to raise between $20 million and $100 million through the IPO.

CoWare is banking on Wall Street's tendency to favor software companies who can also influence the embedded software market. "We are riding the wave of the embedded processor," Naumann said.

CoWare is seeking to position itself in a manner similar to the way IP vendor ARM Ltd. is positioned in the chip market. "We have to connect with trends such as the fact that as long as embedded processors need software, as long as complexity is increasing, people will need a new way to do things," he said.

With ESL beginning to enter the mainstream of design, much still needs to be done by companies like CoWare as they scramble to meet industry needs. Naumann said between 20,000 and 30,000 designers are using the new methodology, but the total must double.

"ESL will be a mainstream methodology only in the next 18 months or so. But more design failures may cause a movement to ESL even faster," he added.

CoWare's corporate investors include ARM Ltd., Cadence Design Systems, STMicroelectronics and Sony Corp. CoWare executives currently hold about 50 percent of the company's equity.