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Cadence Eliminates at least 12% of Workforce

My friend on the inside was right; Wednesday was the day, judging by today’s news release. Cadence expects to eliminate, “at least 625 full-time positions, representing 12% of its global employee base, plus a substantial number of contractors and consultants.” Sources tell me this number will be closer to 1,000 by Dec’08. And this number is on top of quieter layoffs that have occurred since the summer.

My heart goes out to all those seasoned and skilled professionals who lost their jobs. I hope the new management – as yet to be announced – will be able to turn Cadence around. It’s certainly possible, but time is running out as the EDA industry continues to consolidate.

5 Responses to “Cadence Eliminates at least 12% of Workforce”

  1. Sean Murphy Says:

    I think it will be very hard for a traditional “end to end” EDA vendor to make the cuts necessary to become a focused niche provider. But in the face of a continuing license inventory overhang from earlier long term deals, a downturn in the Semiconductor industry, and a general downturn in the world economy, they don’t seem to have any choice. They cannot spread what is effectively a 20-25% FTE cut across the board or they will cripple everything. They need to pick winners, especially in emerging opportunity areas.

    I think they need to find a more entrepreneurial CEO, someone like a Mike McNamara (see http://www.cadence.com/community/members/Mack.aspx he doesn’t seem to have an executive bio up at Cadence) who has grown several EDA companies from scratch, who can identify entrepreneurial managers within the company and develop entrepreneurial product leadership with the ability to explore and win business in emerging markets.

    There was an interesting footnote in the November 5th 8K associated with this restructuring:

    (e) Cadence has determined that no payment shall be made to Cadence’s named executive officers or the other participants in the Cadence Senior Executive Bonus Plan for performance in fiscal 2008.

    I would hope that this would have been included in their last quarterly report if they hadn’t pulled it due to the need to restate revenues for the last two quarters.

  2. harry ... the ASIC guy Says:

    A Scalpel or a Hatchet?…

    I spoke to a friend of mine at Cadence yesterday morning.
    “I came in this morning and tried to log on and I couldn’t.  Turns out I must have mistyped my password, but I was worried there for a minute.”
    That seems to sum up the mood …

  3. John Blyler Says:

    Harry. O, that’s a frightening feeling. Been there too many times, as I suspect most of us have.

  4. John Blyler Says:

    Hi Sean. “They need to pick winners, especially in emerging opportunity areas.” There’s blood in the water as both Synopsys and Mentor are looking to take big gains in market share from Cadence. But where will these areas be? Here my quick-and-dirty guess at potential fucntional areas that might be cut:

    > P&R – Mentor already seems to be making headway with the Sierra acquisition
    > DFM – Cadence was strong in this area (Clearshape acquisition and others). But both Mentor and Synopsys have growing shares here too.
    > System-Level – Cadence was making a renewed effort to reclaim this space, but too much time has pasted since the spun off CoWare. Both Synopsys (with the Virtio and Synplicity acquisition) and Mentor (with Summit Design acquisition and Catapult C Synthesis tool) have a strong presence in system-level design/verification
    > AMS – Cadence has long ruled the design of analog circuits. PCells, RF Design, etc. But the landscape is changing. Mentor has long had tools in this space. And Synopsys has made a stronger push in AMS design too – with Sandworks acquisition and their own Discovery tools. Plus at least Mentor (and Cadence) have tools that work with Agilent’s ADS simulation/verification software.

    Any thoughts?

  5. Sean Murphy Says:

    It’s actually a very hard question. They have to retain key revenue generating products but place some bets on where the industry is headed. They face two stronger competitors in Synopsys and Mentor, the first because they are now clearly the dominant player, and the second because they have already executed the transition that Cadence is on the precipice of and placed their bets.

    But their real challenge is not product technology but the need for entrepreneurial leadership at an executive level and a product level. I think Cadence shareholders should take a very hard look at the board and consider if it would not benefit from more folks who have actually built companies.

    It’s easy for me to sit on the sidelines and critique but I think we have experienced a sea change in EDA without fully appreciating it: no amount of “cost saving’ will enable survival. Firms in an industry have to decide on common standards for cooperation and along what axes they will compete. Both sets of those decisions (and they are really two sides of the same decision: is this something we are going to standardize on or compete on) have to be explored in dialog with competitors, customers, common suppliers, and potential customers.

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