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Autodesk Buys Firehole

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Autodesk Inc. (ADSK) recently announced that it has completed the acquisition of privately-held Firehole Technologies (DBA Firehole Composites) for an undisclosed sum. Laramie, Wyo.-based Firehole Technologies develops software that is used to design and analyze performance of composite materials.

Composite material is made by combining two or more materials, the most common example being fibreglass. The biggest advantage of composite material is that it is light yet strong, which makes it a manufacturer’s favorite.

However, the rising use of composite material in construction, design and engineering industry has made it imperative for manufacturers to evaluate its performance. Firehole software products Helius:MCT and Helius:CompositePro are primarily used by manufacturers for this purpose.

Autodesk believes that the acquisition of Firehole will help it to penetrate composite materials software market going forward. Autodesk said that it will continue to sell, support and expand the Firehole Composites product line going forward.

Autodesk expects the acquisition to have no impact on the guidance issued on Feb 25, 2013. Currently, Autodesk expects revenues to be in the range of $570 to $600 million and non-GAAP earnings in the range of 41 cents to 46 cents for the first quarter of 2014. Autodesk provided fiscal 2014 guidance, which reflects 6% growth in revenues. Autodesk expects operating margins to expand 125-150 basis points compared with fiscal 2013.

Acquisitions have played a pivotal part in developing Autodesk’s business over the last three years. Autodesk acquired more than 23 companies over the last three years for a total of $259.0 million. Autodesk continues to expand its product portfolio through the acquisition of small start-ups that are easy to integrate within its own business line. Acquisitions have also helped Autodesk to expand its cloud-based product offerings in the recent times.

Autodesk is also increasing its penetration in the mobile market by developing software for Apple’s (AAPL) iOS and Google’s (GOOG) Android platform, which will further drive market share going forward. However, sluggish macro-economic environment, and weakness in emerging markets, customer concentration and increasing competition from Adobe Systems Inc. (ADBE) are the major concerns in the near term.

Currently, Autodesk has a Zacks Rank #3 (Hold).

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