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SAN JOSE -- Cadence Design Systems reported second-quarter revenue fell 15.9% to $329 million versus the same period in 2007. GAAP net income was $5 million, down 92% year-over-year.
Sales were up 15% sequentially, but the company called the quarter "difficult" and subsequently lowered its 2008 outlook.
"Although we achieved our second quarter numbers, it was more difficult than we planned. Customers are demanding still more flexibility in when, what and how they purchase software and hardware,” said Mike Fister, chief executive, in a press release.
“As a result we’ve made the decision to lower our outlook and transition to an approximately ninety-percent ratable license mix. We believe this transition will enable us to keep our focus on the value of our technology. This decision is the right one for our business over the long term and for building and sustaining strong customer relationships into the future."
The model Cadence previously followed was a 50% ratable/50% upfront mix.
For the quarter, revenue totals included $195 million from products, $100 million from maintenance, and $34 million from services. Just about half of revenues came from the Americas, up from 40% sequentially. Asia's share was 30%, Japan 18%, and Europe 21%.
The company guided for third-quarter revenue of $235 million to $245 million and a net loss. For the full year, the company lowered its sales outlook to $1.12 billion to $1.14 billion.
"The environment has deteriorated," Fister said during the company's scheduled quarterly conference call. "I have almost everywhere in the last month, and even if you look at the spate of announcements from a variety of sources, not necessarily concentrated in the semiconductor industry, environment has gotten worse. I am struggling to find anybody who thinks that the second half is going to be strong, let alone hold up to where it was, and that's continuing to reach out into, not just the first half of 2009, but the second half of' 2009."
Fister was on the receiving end of aggressive questioning during the call, particularly when Citigroup analyst Terence Whalen pointedly asked, "Can you give us several reasons why you're the right person to continue to lead Cadence into the acquisition [for Mentor Graphics] and after?"
Cadence now owns 4.7% of Mentor and is pursing a takeover of its rival, and Fister had earlier called the proposal "extremely compelling." In response to Whalen's question, Fister said, "[I]n 10 years of acquisitions Cadence has integrated something like 36 companies, and the ones that have been done in recent history have been the most successful acquisitions in terms of retaining technical talent and demonstrating business results of any parallel in the industry."
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