Cadence – From Hunter to Haunted
Seems as if my summer blog was mistitled: Watch out Cadence – The Hunter may become the Hunted. Back then, Cadence was trying to take-over Mentor. Now, judging from the drop in stock and investor confidence, Cadence wasn’t really the hunter. Instead, Cadence was shooting at anything that moved – haunted by leadership whose ghostly edicts seem to emanate from another non-EDA world. Perhaps that of a famous IDM?
Jay Vleeschhouwer, Research Analyst at Merrill Lynch, captured the problem in more financial terms in a Price Objective Change report issued today: “It our view that the “EDA competition pendulum” is swaying away from Cadence and towards peers Mentor Graphics and Synopsys in terms of positioning and 2007-2010 bookings momentum.”
Jay acknowledged that the change in Cadence’s upper management might be a morale booster, while cautioning that “the extent of it does raise questions about execution and high-level customer engagements capacity for the time being, something its competitors might look to take advantage of.”
I think that Cadence’s 3Q08 conference call on Oct. 22nd should be well attended.
In other related news:
> Pallab Chatterjee’s commentary:
– Pilotless Cadence and the Wayward Direction of EDA
> In Ivy Lessner’s story from The Street , Gary Smith was quoted as saying that “Cadence could itself become a takeover candidate — not by a rival firm but by one from the allied mechanical design industry, dominated by Dassault Systemes.”
I’m glad that Gary agrees with my earlier analysis of the potential suitors for Cadence. I’m referring to my blog and Portland Business Journal quote of last summer: “Cadence’s products could be a good technical fit with Autodesk’s, says Chip Design Magazine editor John Blyler, who lives in Portland. He also suggests Dassault Systemes S.A., a $1.26 billion French software company, as another possible acquirer, though Autodesk has more cash, with more than $900 million on its balance sheet.
> Gab Moretti talks about Cadence’s corporate disfunctionality in his blog.
> John Cooley used the “why not elect me CEO” routine. It’s a fun read.
> Peggy Aycinena focused on the importance of the interim leadership.
You can bet that this is not that last time Cadence financials will be in the news. But the hunt is becoming much more interesting.