Zacks_Analysts' Blog : Autodesk Buys T-Splines' Assets - Analyst Blog

Autodesk Inc. (ADSK">ADSK) announced the acquisition of modeling technology assets from T-Splines, a surface modeling software company. Although the transactional details of the deal were not available, Autodesk confirmed that the transaction would not affect its current quarter guidance.

T-Splines is a privately-held company and makes 3D modeling software for designers and professionals. The CAD modeling software is expected to boost Autodesk’s Digital Prototyping portfolio. Through digital prototyping, professionals can cost-effectively and efficiently design in 3D format, and thereby deliver quality products.

3D is becoming an integral part of film production, video game development and television, which could mean considerable growth for Autodesk. The company’s 3D products currently make up around a third of its top line and we anticipate that increasing 3D adoption will drive significant top line growth while expanding margins over the long term.

Autodesk has been on an acquisition spree and has acquired several companies to enhance and strengthen its product portfolio. It has also expanded its reach in the cloud based services that would be incrementally beneficial for the company going forward.

Moreover, the recent acquisitions (GRIP Entertainment, Micro Application Packages Ltd. and Koblenz, Germany-based Numenus GmbH) in the CAD and gaming middleware sections will provide the company with long-term opportunities, particularly in the web-based communities that will likely boost its cloud offerings going forward. In 2011 alone the company has acquired 12 companies so far.

Autodesk has a strong balance sheet with no debt. This provides the company with necessary liquidity to make further acquisitions, which can be easily integrated into its existing operations. We believe this will further strengthen its stronghold in the CAD design market going forward.

Moreover, the company’s improvements and innovations in 3D design technology and superior product portfolio provide it a competitive edge over Adobe Systems Inc. (ADBE">ADBE) and Parametric Technology Corp. (PMTC">PMTC) in our view. However, foreign exchange fluctuations and significant exposure to Europe, and customer concentration remain major concerns.

We have a Neutral recommendation on Autodesk’s shares in the long term. Currently, Autodesk has a Zacks #3 Rank, which translates into a short-term (1-3 months) Hold rating