Now is the time to get in, the worst is over. The economy has hit bottom and is improving, capital spending is returning, Cadence has reduced their expense base to enable profitability, the new mgmt team is focused on long term stability and growth, and I hear R&D has a lot of new products in the pipeline.
I am buying now while it's still cheap.
People, CDNS price is not going up significantly anytime soon.
1. The economy is far from healed - look at yesterday's data
2. Semi needs more consolidation. This will mean less customers in the future for all EDA players
3. There is nothing new in EDA technology to drive topline growth
4. CDNS has done nothing to restructure and cut their costs
5. Advanced node design is too expensive from many semi products so old tools work just fine
6. There is still too much discounting for all contract renewals
Oh great that's all we need. Lets buy a company that has no cash, some dubious loan deals and as far as I can tell NEVER made a profit on a GAAP basis.
To me it looks like Magma is in even worse shape than Cadence, their own auditors even claim they may need to file BK!
Now if Cadence were to get bought out by Synopsys that may be a different story...
You bashers are never happy. 1st it earnings that are key. No, it's cash flow...no, it's stock holders equity. Geez.
Regarding expenses, CDNS cut in Q4 and Q2 taking $150M, the $30M out of their run rate. The benefits of this will be apparent in Q3 when they break even (or, hopefully better).
Keep on bashing and selling short while I buy and see it hit $8 by year end.
This is what is troubling as a shareholder. This is the quarterly stockholder equity that is moving towards nothing.
Applied Materials just took the bold move to cut expenses and now CDNS needs to do so as well.
Total Stockholder Equity 86,386 147,685 101,968 1,704,951
This prognosis is wrong on almost all counts IMO unfortunately.
This stock is not cheap considering the continued fragile financial state of this company.
This company is hemoraging multiple hundreds of million dollars a year on revenue of ~$850M, primarily due to cost structure being out of balance to their revenue (which is 40% of what it was two years ago). How exactly does that reflect a management team focused on long term stability and growth? This company has historically held a lot of cash, but at the rate they are bleeding it off, they will be cash poor very soon. Couple that with a cost structure that is still more then 30% high for their revenue plan and you have disaster, not return to profitability.
As for new products in R&D. When exactly in the last 10 years has Cadence ever rolled out genuine new technology out of R&D? They aquire their technology through aquisitions, and they pay high premiums to do so. They lack the cash to do this these days, and they are too weak on the balance sheet to get credit, nor can they afford to dilute their stock any more through stock swaps to aquire.
If you are so bullish on CDNS, you should have bought when the stock was hovering at $2, not while it is stuck at $5-6. This stock is a risky buy, not to mention that it has negative growth in share holder value over 3, 5, and 10 years. It's not a buy and hold stock, it is a stock you buy at the bottom, hold for a short period of time, and cash out on the upswing before the next bottoming out cycle. You missed the latest bottoming out cycle, so best to wait for the next one.
Cadence is the weakest of the big three now days, both in terms of financials, customer satisfaction, and quite frankly technology as well (with the exception of Analog). Ask the customers, they will tell you.
You need to stop looking in the rear view mirror. A few points:
1) They have a new and strong/committed mgmt team
2) They were cash flow positive in Q209
3) They expect to break even and be cash flow positive in Q309
4) Orders are lower due to shorter duration, but '09 or '10 Revenue guidance didn't change.
5) I bought at $2.90, $4.25 and this week at $5.80 - nice return so far, more to come.
The future looks bright to me.
Don't believe CDNS will see profits anytime soon. Oil prices are rising and that could take the steam out of the economy.
Also, CDNS does not have any new products coming out. The best they have would be some enhancements.
CDNS has not cut expenses to the level of their current business. Given that, you will continue to see losses.
Finally, the semiconductor market has changed. Only the real high volume parts will use advanced nodes and thus need new tools. Otheres will stay with existing tools and not buy from CDNS.
Sell CDNS now.
That's the sizzle, where's the steak?
In other words: As a current Cadence user, using Cadence tools in advanced technology nodes,I am not interested in new products.
Can we just have the current products working per the user manuals, and out-performing (or at least competing with) the offerings of other EDA companies?