Cadence cuts 625 jobs as it looks to save $150M
The layoffs follow the abrupt exit of Cadence's former CEO Mike Fister and the postponement of the EDA company's Q3 report.
By Suzanne Deffree, Managing Editor, News -- EDN, November 5, 2008
Cadence Design Systems Inc has announced plans to cut 625 full-time positions, representing 12% of its global employee base, plus an unspecified "substantial number" of contractors and consultants in an effort to save $150 million.
The layoffs have been rumored since mid October when Mike Fister, Cadence's former CEO, as well as four other high-level executives, abruptly exited the company after a failed attempt to acquire rival EDA player Mentor Graphics Corp.
One week after the resignations, Cadence postponed its Q3 report, saying it was reviewing the recognition of revenue related to customer contracts signed during Q1 and that some $24 million in contract revenue was mistakenly reported for the March quarter.
Cadence said that the workforce reductions are expected to be completed in the second half of 2009. Cadence further said it expects to record a restructuring charge of approximately $65 million to $70 million pre-tax, $48 million of which will be recorded in Q3 2008.
Unlike the growing list of semiconductor companies that have announced layoffs in recent weeks, Cadence did not specifically blame the cost-reduction action on the current financial crisis. Instead, Cadence made more general statements and said the restructuring is "designed to focus the company's strategy, streamline the business, and improve operational execution and financial performance."
"In creating the restructuring plan, we emphasized those market segments where Cadence enjoys a leadership position, such as mixed-signal design, advanced verification, and low-power design," Charlie Huang, senior VP, member and chief of staff of the interim office of the chief executive, said in a statement this afternoon.
Huang did not note digital physical design, which was once one of Cadence’s great strengths, as a target competency.
"Going forward, we will focus on excelling in our core business areas, and continuing to serve the needs of our semiconductor and electronic systems design customers as they innovate to create the next generation of electronic devices," he said.
Huang is one of four executives that make up the interim office of the chief executive, which the company created to oversee day-to-day operations while it searches for a permanent president and CEO to replace Fister. In addition to Huang, John B Shoven, Cadence board chairman; Lip-Bu Tan, a director of Cadence since 2004; and Kevin S Palatnik, senior VP and CFO, make up the interim office.
