Autodesk Buys Numenus' Assets

A leading developer and provider of 2D and 3D model-based design, engineering and documentation software and services, Autodesk Inc. ( ADSK - Analyst Report ) recently announced that it has acquired certain technology assets from Koblenz, Germany-based Numenus GmbH.

However, the terms of the acquisition were not disclosed and the transaction is not expected to have any impact on Autodesk’s current outlook issued on August 18, 2011.

Numenus’ technology is efficient in creating life-like images by directly using NURBS (nonuniform rational B-splines) data. NURBS is a mathematical representation of 2D or 3D objects, which can be standard shapes (such as a cone) or free-form shapes (such as a car).

NURBS are used in computer graphics and the CAD/CAM industry and is considered as a standard system of creating and representing complex objects.

With the help of Numenus technology, Autodesk users will find it easier to visualize surfaces accurately, thereby saving time for preparing quality visualization data.

The acquisition is a reflection of Autodesk’s strategy of expanding its digital prototyping solutions, which is expected to cater to manufacturers of all sizes, enhancing their ability to design, visualize and simulate their products before they are built.

Autodesk has been aggressively acquiring companies and technological assets, which are integral to its core business. We expect the company to continue to leverage its merger and acquisition (M&A) strategy to expand its product portfolio globally.

In early August, Autodesk acquired San Francisco-based Instructables, a popular online community for people seeking to discover, share and be inspired by DIY (Do-It-Your own) project ideas. In July 2011, Autodesk completed the acquisition of Pixlr, a popular free online and social image creating, collecting, editing and sharing service.

In the first quarter of 2011, Autodesk completed a number of acquisitions, which include Scaleform Corporation for approximately $36.0 million and Blue Ridge Numerics Inc for $39.0 million. We expect the company’s continued focus on acquisitions to drive growth, going forward.

Recommendation

Autodesk is expected to introduce a collection of new web-based services in late third quarter. These acquisitions particularly of the web-based communities will boost the company’s cloud offerings going forward, in our view.

However, increasing competition from Adobe Systems Inc. ( ADBE - Analyst Report ) , Parametric Technology Corp. ( PMTC - Snapshot Report ) and Avid Technology Inc. ( AVID - Snapshot Report ) remains a headwind.

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