Cadence Cuts Workforce 12%; Needham Expects Revenue Shortfall
Posted by Tiernan Ray
Electronic design automation software maker Cadence Design Systems (CDNS) last night said via an 8-K filing that it will cut 625 employees, about 12% of its workforce to try and save $150 million in operating expenses annually, and will take a pre-tax charge of $65 million to $70 million to do so, $48 million of it in the third quarter. The stock’s been having quite a bit of drama lately, delaying an earnings report after finding accounting issues, having its CEO pushed out the door. Now is the restructuring some had been anticipating. But the cuts probably aren’t quite enough, writes Needham & Co. analyst Richard Valera says the cuts are less than the 20% to 25% cut some on the Street were expecting. He’s holding off on changing his rating on Cadence shares, he writes today, as he expects a “material revenue reduction” to come when the company reports earnings and forecasts the coming quarters, and he’s waiting to see what the scope of that will be. He maintains a “Hold” rating on the shares.
I think there is chance of more cuts.
company has many managers and directors than engineers. small team of verification kit have 3 engineers, one lead ( was hired for design role), one project manager ( does not know V of verification) , one manager managing both of them which are doing same job. This lead and Manager were promoted by director who laid off(Thank God) this month.
more honest,technical and focused engineers need to drive the work. Cadence has Industry's best verification tools and has lot of potential to capture the market.
eda200826, you are obviously rather unfamiliar with cadence. cadence has a long history of being extraordinarily top heavy. when i was working there, just prior to penny's aborted attempt at flattening the company there were at least 7 VP's in the chain between me and bingham. ie, i had a manager, he had a boss and so on with at least 7 VP's in there before bingham. even after penny's aborted attempt at flattening the company, most of the vp's were still there, they just had few people reporting to them (quite a few vp's had no people reporting to them). at one point there were over 200 vp's with a head count of just under 5000. don't know if that is still the case, but cdn has a history of never firing vp's, they just keep piling up, draining the life out of the ocmpany.
so if cdn has yet to purge the vp leeches out of the company, then given past performance, time tells us that the company will sink even further.
The recent cuts will need to be extended by at least 500 to 600 heads. The sinking economy alone will demand this. Even with the second round the problem will still exist. Cadence did not remove the people leading the development of failing products. Without change at this level CDNS is doomed.
Well known that another 400-500 employees will be cut in the next 6 months. This was in the original plan that was rejected as not being agressive enough by the Board. They just need to find a CEO first.
The new CEO will have a lot of cleaning up to do since the new temporary organization inside Cadence is just as messed up as the old Fister one was. The political backstabbing and fighting is just as bad if not worse today then it was earlier this year.
The political situation at Cadence should be sorted out if it is an issue, and let the technical guys drive forward. I hope there won't be more cuts going forward. In customer-facing roles such cuts would impact not only Cadence but also the customer. Cadence needs good, honest leaders with integrity/technical know-how now more than ever, employer loyalty and happy employees!
Yes, of course there will be more cuts. This was a just a down-payment of low-hanging fruit by the temporary management.
It obviously makes sense to let the new CEO make the more difficult decisions on where to cut flesh rather than obvious dead wood.
Equally obviously, there will be more cuts by every company in the Valley as the world economy (all of it) continues to crater next year.