Favorable news flows don’t ensure quick revival.
Of late, Cadence Systems (CDNS) has started securing some new customers. Recently Fujitsu Microelectronics Solutions Limited incorporated the Cadence Virtuoso Multi-Mode Simulation suite of verification software for its most difficult mixed-signal designs. The company is using Virtuoso AMS Designer to run a simulation solution to verify a large-scale mixed-signal SoC designed for the cellular phone industry.
This apart, the Japan Aerospace Exploration Agency incorporated the Cadence Virtuoso IC 6.1 custom design platform and the Cadence Virtuoso Spectre Circuit Simulator. These products will be used in space exploration under extreme conditions.
Although this is positive news for the company, and provides the investor with a sense of well being, the size and intensity of these new businesses are not clear, nor are their impact on the company’s future earnings. Cadence is struggling in a downturn in the semiconductor cycle.
The company also provided a bleak second quarter and FY2009 guidance. We do not disagree that the sum of the parts is greater than the whole, results are unlikely in the short term. The second quarter 2009 will provide a better view of the financial health of the company and the direction it is heading. Until then, we prefer staying away from the stock and continue with our Sell rating.
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