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Cadence Design Systems Inc. Message Board

  • maher735 maher735 Jan 14, 2011 3:57 PM Flag

    The doom and gloom croud

    There were 2 idiots on this forum that advised against investing in Cadence when its shares were trading at $3. I said then that Cadence is worth more than $10 and eventually will reach $30. I wonder where are they now and do they still believe themselves.

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    • well the cfo likes it, he just bought 10000 shares!

    • I made a choice not to buy into this stock after it took a double negative correction in 2008. Simply bad odds. I've made a truck load of money buying CDNS after poor earnings announcments and they get crushed by the market in a price correction. A hold for 9-12 months generally returned 50-100% for me. But that was in years past, when the company was fundamentally on sound footing and had real growth potential. This is no longer the case, and quite frankly I did much better investing in other stocks during the market lows when this dog was trading under 3.

      The fact is that CDNS financials are sick. Their SGNA and R&D expenses are way too high for a $900M dollar company. This reflects my earlier comments taht the company simply is not stepping up to cut it's cost structure to match it's real revenue run rates (hence it loses money consistently now, even when most other companies are making a truck load of profit. So it's a dog based on it's financials, it's a dog based on it's R&D innovation (which is nonexistent), and it is a dog based on the market segment it is vertically lock into.

      You are free to invest in it. I am free to not invest in it. Others are free to read what we each have to share and decide what is right for them. If it had any kind of legs, it would have passed 15 last summer, but it did not, which exemplifies it's continued weakness. The lack of stock price jump on day two after the "news" exemplies this as well. It received a nice one day bump as the institutions juggled their mix holdings of the stock in their portfolios, nothing more then that.

      So, are you going to step up and justify your earlier claim that this stock is headed for $30? or are you just going to keep deflecting? Come on, you boasted it, man up and substantiate it with solid data and financials. :-)

    • A few comments.

      1) you have been reported to the board admins for TOS violation, using derogatory and inflamatory words about other users.

      2) this particular stock traded at 3 during the peak of the recession and the trough of the market, more or less. So it is certainly not rocket science that it would ride up with the market to some degree, just as it rode the market down. The people users you referenced through derogatory words, actually were pointing out that this stock has no strong valuation and growth until such time as the company reduces it's cost structures to be in line with it's rapid collapse in revenue (which it has yet to do).

      3) it is not, and was not last year either (when you claimed it would be) a stock trading at 10. It recovered with the rest of the market (riding market momentum) and has wobbled up and down from there at the sub-10 range.

      4) the last time this stock traded at 30 was more then a decade ago. A very different time for EDA and for tech stocks in general. A decade ago, Cadence was a real contender in the EDA market, at a time when the EDA market was strong and growing. It no longer is, nor is EDA as a market segment.

      5) three years ago, this stock earned a revenue of 1.6 billion. Then it collapsed and has since been an 800-900 million a year revenue generator. Yet it has not reduced it's cost structure in accordance with it's collapse in revenue. Which is why there was significant and quite relvant comment and critique in the recent past about the company share price NOT thriving until such time as it created a cost structure in line with it's revenu potential. Hence, stronly run companies with strong financials such as Synopsys have a strong share price, and others like Cadence and Mentor do not.

      6) EDA is a market segment that has largely canibalized it's own revenue stream through heavy and pervasive discounting of sales to it's corporate customers. Cadence actually led the way on this as a method to try to drive it's competition into the ropes. A dangerous ploy that in fact backfired on Cadence, while pretty much squashing all but one competitor. Such a market approach only guarantees that there will be one gorilla left stomping and romping. In the case of EDA, it is Synopsys. Synopsys because they have overall the stronger product offering that is most valuable to customers (though no EDA provider offers a real end to end solution).

      Rather then being derogatory to other users, mayber provide some actual objective analysis to support your claims of a stock that will "eventually reach $30".

      By the way, it won't. Cadence is a shell of its' former glory as the largest EDA provider. The only upside for shareholders on this stock is if someone buys the company at a premium per share. Even at that, $15 would be a stretch. The stock is largely held by a small number of institutional investors, and I honestly do not understand what they see in holding large blocks of this stock (unless they bought it at trough prices).

      • 3 Replies to waywardsand
      • Good points all! might add very weak management team, starting with the CEO and the CFO....interesting look at their past failures. Could indicate a possible future.

      • look out for the hall monitor

      • You are not analyzing the financial performance of the company. All you are doing is repeating the same nonsense you gave when the shares were trading at $3. Furthermore, no one in his right mind will pin all his hopes on one single company. Cadence revenue in 2010 was $924 million and in 2011 is expected to grow its revenue to over a $1 billion. It’s earning per share in 2010 is $0.17 and is expected to double that in 2011. You can do a comparative analysis between Cadence and other competitors all you want but there is enough blue sky for everybody. One thing to look at is insider buying, Cadence has net insider buying, which usually bodes well for the share price. Now how high will the share price go – that I do not know, but I know if you bought at $3 and sold at $9 you made 300% return, and that is all that counts in investment.

    • I just started looking at CDNS. Mostly spammers on here it seems. I don't know about 30 but it looks like it still has legs. GL

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