Cadence Design Systems Inc warned Tuesday night that its revenue and earnings growth would slow down for the rest of the year, and that its services business might be affected by a new emphasis on higher-margin business. Cadence, whose first quarter earnings came in on target with Wall Street’s expectations, said the services business had not made its expectations. The company’s stock dropped 40% early Wednesday to a three-and-a-half year low, eventually closing at $12.50. Yesterday, the price slipped further to close at $12.00.
Cadence CEO Jack Harding also claimed that there had been a general delay of one to two quarters in the acceptance of 0.18 micron design tools among semiconductor makers. But analysts denied that there was any such slowdown, and voiced doubts about Cadence’s ability to compete in deep submicron designs, where it is facing competition from a new breed of companies with new tools. Cadence also said it was repositioning its services business towards higher-margin contracts.
Quickturn Design Systems Inc, which Cadence is currently in the process of acquiring, was not affected by the downturn, Harding said, and revenues and earnings for the company are still expected to grow due to acquisitions.
