Cadence cuts 225 jobs as it aims to save $30M

Reductions will come primarily from resizing the company's worldwide field organization, decreasing the level of investment in the manufacturing side of DFM, and other infrastructure areas of the business.

By Suzanne Deffree, Managing Editor, News -- Electronic News, 6/11/2009

Cadence Design Systems Inc has announced a restructuring plan that it estimated will result in annual operating expense savings of approximately $30 million through a combination of workforce and other expense reductions.

Approximately 225 full-time positions, or 5% of the EDA company's workforce, will be eliminated, Cadence said. The job cuts come after Cadence in November announced it would shed some 625 employees in an effort to save $150 million.

The reductions will come primarily from resizing the company's worldwide field organization to current business levels, decreasing the level of investment in the manufacturing side of DFM (design for manufacturability), and other infrastructure areas of the business, Cadence explained.

Because of varying regulations in the countries in which Cadence operates, the layoffs will be realized over a period of time and are expected to be completed in the second half of fiscal 2009, Cadence said.

"The measures we are announcing today streamline our operations as we simultaneously invest to enhance technology leadership in key growth areas," said Lip-Bu Tan, Cadence's president and CEO, in a statement Wednesday afternoon. "We are confident that the changes we are implementing will make Cadence a stronger, more focused company as we emerge from the current economic downturn."

For more on Cadence's strategy, see: Cadence executive cogitates future of IC design A new hand on the helm at Cadence

Tan is still relatively new to the high-level position. Tan was confirmed as CEO earlier this year. He had begun working in the position on an interim basis after former CEO Mike Fister abruptly resigned from Cadence in October. 

Cadence said the expected annual operating expense savings announced this week "take into account additional investments planned for areas of critical importance to the company's customers, including verification and system-on-chip development."

"Our immediate focus is on our core capabilities, streamlining operations, and preparing for the next phase of Cadence's growth," said Kevin S. Palatnik, senior VP and CFO, in the statement. "Consistent with this focus, we have resized various levels of investment in the business, resulting in the actions announced today."

Cadence expects to record a restructuring charge of approximately $20 million to $25 million pre-tax, approximately $18 million of which will be recorded in Q2.