Mentor Graphics posts surprise Q2 profit, ups FY view

BANGALORE (Reuters) - Chip-design software maker Mentor Graphics Corp (MENT.O) posted a surprise adjusted quarterly profit as its top customers renewed accounts, and raised its fiscal 2011 outlook.

Mentor Graphics, which rivals Synopsys Inc (SNPS.O) and Cadence Design Systems Inc (CDNS.O), now expects full-year adjusted profit of 65 cents a share and revenue of about $880 million.

It had previously forecast a profit of 60-65 cents a share on revenue of about $870 million.

"Semiconductor markets continue to improve, with revenues at an all-time high, and industry analysts forecasting continued growth," Chief Executive Walden Rhines said.

Second-quarter net loss narrowed to $14.2 million, or 13 cents a share, from $21.3 million, or 22 cents a share, a year ago.

Excluding items, the Wilsonville, Oregon-based company earned 1 cent a share, while analysts were expecting a loss of 4 cents a share, according to Thomson Reuters I/B/E/S.

Revenue rose 3 percent to $187.9 million, beating market expectations of $180.5 million. An 11 percent jump in revenue from services offset a decline in software revenue.

Annualized revenue from renewal contracts in Mentor Graphics' top ten accounts grew 45 percent.

The company's shares, which have risen 9 percent in the last six months, were up 1 percent at $9.13 in extended trading. They closed at $9.02 Thursday on Nasdaq.

(Reporting by Sayantani Ghosh in Bangalore; Editing by Anne Pallivathuckal)