Autodesk Settles Lawsuit

Autodesk, Inc. (ADSK: 26.26 +0.78 +3.06%) announced the settlement of a lawsuit against Dassault Systèmes SolidWorks Corp. (SolidWorks) pending in the U.S. District Court for the Northern District of California. Autodesk had alleged that SolidWorks inappropriately used its trademarks AutoCAD and DWG in 2008.

However, SolidWorks made counterclaims against Autodesk. SolidWorks is a unit of Dassault Systèmes S.A, a 3D design software maker. To resolve the matter, Autodesk and SolidWorks have each agreed to dismiss all claims by entering into a confidential settlement agreement. Moreover, management did not give any details of the settlement, but said that all claims between the two rivals were dismissed.

Autodesk develops 2D and 3D model-based design and documentation products. The company’s principal products include AutoCAD and AutoCAD LT software (2D horizontal products), which accounted for 36% of total revenues in fiscal 2009.

AutoCAD is the company’s largest revenue-generating product and is a fully automated design and drafting platform utilized by architects, engineers and other design professionals to manage workflow and the total design process.

The company continues to build momentum through its flagship product – AutoCAD, which is a traditional driver of the stock. Longer term, we believe that the success of the AutoCAD subscription program and annual upgrades for AutoCAD should lead to increased visibility and reduced volatility for revenue and earnings.

However, Revenues from 2D horizontal and vertical products declined 37% year over year in the third quarter of 2009 and decreased marginally from the previous quarter. Moreover, combined revenue from AutoCAD and AutoCAD LT declined 39% year over year in the third quarter of 2010.

Although the company has a strong market position in the “mainstream” CAD market, it faces competition from Dassault Systemes. Moreover, the company competes against Adobe Systems Inc. (ADBE: 36.69 -0.20 -0.54%), Apple Inc. (AAPL: 211.98 +1.40 +0.66%), Avid Technology (AVID: 12.81 +0.06 +0.47%), Sony (SNE: 30.41 +0.61 +2.05%) and Thomson Reuters (TRI: 33.49 +0.45 +1.36%).