Last Call: Magma Design hits all-time low

Shares of Magma Design Automation Inc. fell to a new all-time low Friday after the chip design software company lowered its fiscal-year sales outlook.

Magma shares fell 47 cents, or 8.5 percent, to $5.08. Earlier, shares traded as low as $4.60. The stock's previous all-time low was $5.43, which it set in April 2005.

The company said it now expects $158 million to $160 million in sales for the fiscal year. It had previously expected $225 million to $230 million, according to a company spokesman.

Analysts forecast $209.9 million in revenue, according to a poll by Thomson Reuters.

Magma said it is changing its business model so that it will derive 90 percent or more of revenue in any period from its backlog and the rest from transactions completed during the period.

In a client note, Needham analyst Richard Valera said "While Magma's weakened state would appear to make it an acquisition target, in our view, lack of a compelling strategic fit with potential buyers makes a timely buyout possible, but not likely."

The analyst, who rates the shares "Neutral," said added that he'd like to "see signs the company was credibly executing towards its fiscal 2010 targets" before he becomes more positive on the stock.