Autodesk Inc.ADSK

Morningstar Rating

Stock Research and Analysis

by Rafael Garcia

Although the current liquidity crisis has dealt a blow to Autodesk's near-term growth as its clients increasingly postpone new projects, the firm's strong competitive position--its wide economic moat--has not changed. We believe that Autodesk will continue Read more

Bulls Say

High switching costs help create Autodesk's wide moat. Engineers and designers are trained on AutoCAD in college, and employers don't want to incur the costs to retrain them on different software.

Autodesk benefits from a network effect. Designers, manufacturers, and suppliers must share digital designs across time zones, necessitating that all of them use the same software. The company should benefit from increased global design collaboration.

Although management estimates that for every legal license of its products, there are as many as three pirated licenses, the company has made good progress at converting nonpaying licenses to legal licenses. This effort has helped increase license revenue from emerging economies. Read more

Bears Say

Although Autodesk uses more than 2,000 distributors around the world to generate 86% of revenue, it remains dependent on a few big distributors. In fiscal 2009, the company derived 14% of its revenue from Tech Data TECD. The loss of a big distributor could hurt revenue.

International sales accounted for 66% of revenue in fiscal 2009. This geographic diversity shields Autodesk from an economic slowdown in one particular country, but it exposes the company to currency risk if the U.S. dollar falls. Read more

Strategy

Autodesk's strategy is to sell low-cost, easy- and ready-to-use CAD applications to mainstream users. The company leverages a global distribution network to sell, implement, and support Autodesk's products. Read more

Management

Carl Bass assumed the CEO position in May 2006; before that, he held other executive positions within the company, including COO. He has been with Autodesk since 1993. Crawford W. Beveridge became nonexecutive chairman in March 2009 after Carol Bartz, Read more

Profile

Autodesk is the leading vendor of computer-aided design software. Its customers are in 160 countries and range from 98% of the Fortune 1000 to single-person architectural Read more

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