Mentor Graphics revenue down, reports loss

Electronic-design tools maker Mentor Graphics Corp. announced first-quarter revenue that was down almost 8 percent from last year's first quarter, and a loss of $27.5 million, compared with a small profit in the previous year's first quarter.

Wilsonville-based Mentor (NASDAQ: MENT) reported revenue of $179.2 million in its first quarter, ending in April, down from $194.5 million in last year's first quarter.

Mentor lost 30 cents per share in the first quarter, compared with a profit of $290,000 in the prior year's first quarter -- a profit so small it can't be expressed on a per-share basis.

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The loss exceeded analyst expectations. Analysts polled by Thomson Financial expected the company to report a loss of only 10 cents per share.

Despite the loss, the company's stock was up nearly 6 percent to $10.74 in afternoon trading, likely because the company beat revenue estimates.

Analysts expected $170.1 million in first quarter revenue.

Results were affected by high charges for the company's restructuring efforts. Mentor spent close to $9.7 million on restructuring, up from $4.1 million in the same quarter last year.

Mentor is trying to cut operating costs, which to a large extent means layoffs, and the severance payments that come with them.

Mentor routinely acquires smaller electronic-design firms, and made one large acquisition last June: Santa Clara, Calif.-based Sierra Design Automation, purchased for $90 million in cash and stock.

Mentor's acquisitions have resulted in a steady increase in employee count over the years. Sierra Designs, for example, employed nearly 100 people.

At the end of 2003, Mentor employed 3,600 people. The company employed 4,222 at the end of April this year. But Mentor has tried to hold down its increase in employee count over the past year, and employs just 22 more people than it did a year ago, despite the acquisitions of the past 12 months.

Mentor said it expects revenue of $173 million in the second quarter, with a loss of 18 cents to 23 cents per share.

For the full fiscal year 2009, Mentor expects revenue to be $915 million, with earnings of 45 cents to 50 cents per share. That expectation represents a revenue increase of 4 percent, and an expected increase in profit from last year's earnings of 32 cents per share.

The stock has traded between a low of $7.51 and a high of $16.50 over the past 52 weeks.