Dow Inks Deal with Semantic Designs

In an effort to attain the leading position in the industry with respect to security, reliability and quality, The Dow Chemical Company (DOW - Analyst Report) announced that it has signed a process control software reengineering contract with Semantic Designs (SD), a provider of automated software engineering tools based in Austin, Texas. The contract will allow Dow to get access to the approach handle application deployed in SD’s facilities worldwide.

According to the contract, SD will use customized tools to better understand and enhance Dow’s applications and facilitate smooth migration to other industrial control platform. The custom tools will be constructed on a foundation offered by Semantic Designs' sector-major DMS Software program Reengineering Toolkit, an engine for constructing customizable tools for analyzing and transforming the supply code of large, complex computer software systems. Dow’s proprietary Manufacturing Operating Discipline (MOD) systems will also be customized and the knowledge contained in these systems will be recovered and preserved by Semantic Designs.

DMS is distinctive in the software sector for its capacity to approach a wide selection of modern day and legacy computer languages. DMS can absorb an entire software system of millions of lines to gather precise information across the whole system.

The expertise of DMS can then be utilized to accomplish a desired buyer effect, specifically huge automated modifications, driven by pattern-directed matching and code transformation guidelines.

Last month, Dow released its third quarter 2012 results. The company earned 42 cents a share in the quarter, down from 69 cents (or 62 cents excluding items) posted a year ago. However, earnings in the quarter topped the Zacks Consensus Estimate of 37 cents. Dow’s profit tumbled 39% year over year to $497 million as lower pricing dragged down its sales in the quarter. The company also saw weak demand for its products in the quarter, largely stemming from the recessionary conditions in Europe.

Revenues slipped 9.7% (or 7% on an adjusted basis) year over year to $13,637 million in the quarter, missing the Zacks Consensus Estimate of $14,130 million. Sales fell across all segments except Agricultural Sciences, which was the only bright spot in the quarter. Revenues in Europe slid 10%, largely due to unfavorable currency translation.

The company competes with EI DuPont de Nemours & Co. (DD - Analyst Report) and currently retains a Zacks #3 Rank that translates to a short-term (1 to 3 months) Hold rating. We currently have a long-term (more than 6 months) Neutral recommendation on the stock.