WASHINGTON Cadence Design Systems Inc. said Wednesday (Nov. 5) it will lay off 625 full-time workers, or 12 percent of its global workforce, in an effort to cut operating costs.
The job cuts, along with elimination of a "substantial number" of contractors and consultants, is expected to result in at least $150 million in savings, the company said in announcing its delayed restructuring plan.
In a research note published Thursday, Needham and Co. analyst Rich Valera said that including the contractors and consultants the practical number of employees let go by Cadence would be at least 15 percent.
Cadence (San Jose, Calif.) was to have announced details its restructuring plan along with third quarter financial results last month, but delayed the disclosure to complete an accounting review.
Michael Fister and four other top executives resigned from Cadence on Oct. 15. Industry observers immediately predicted Cadence would lay off workers in an attempt to survive in a shrinking EDA market.
In a statement, Cadence said it would complete the restructuring in the second half of its 2009 fiscal year. It expects to record a pre-tax restructuring charge of as much as $70 million.
"In creating the restructuring plan, we emphasized those market segments where Cadence enjoys a leadership position, such as mixed-signal design, advanced verification and low-power design," Charlie Huang, Cadence senior vice president and chief of staff of its Interim Office of the Chief Executive, said in a statement.
Valera noted that Cadence had been rumored to be on the verge of cutting off as much as 25 percent of its workforce. Valera said Needham believes that Cadence shares are likely undervalued relative to its long term potential but that the firm remains cautious given the uncertainties around Cadence's pending earnings restatement and uncertainties around its near-term business outlook.
In an interview last month with EE Times, Cadence CTO Ted Vucurevich rejected calls by some critics to sell off parts of the company's product offerings like IC CAD tools. Vucurevich also dismissed critics who asserted that Cadence should seek to reinvent itself as a smaller company.