SAN FRANCISCOŚCadence Design Systems Inc. President and CEO Lip-Bu Tan said Wednesday (July 25) he expects to see design activity remain at a good pace in the second half of the year, despite macroeconomic challenges.
Tan's comments came on a conference call with analysts following the company's second quarter financial report, where Cadence reported results that beat analysts' expectations. The company also raised its sales target for the year modestly.
Tan said design activity remained robust in the second quarter, despite macroeconomic challenges such as slowing growth in China, the Eurozone crisis and a slow economic recovery in the U.S. Tan noted that a shortage of 28-nm foundry capacity had cut into sales for some of Cadence's customers and said that both PC shipments and infrastructure equipment sales are showing weakness..
"However, we believe design activity will continue at a good pace in the second half," Tan said. "We are working closely with customers on their most complex designs, our backlog remains strong, and we continue to strengthen our product portfolio. After reviewing our pipeline for the second half, and taking into account the macro risks, we are modestly raising guidance."
Tan said Cadence's 20-nm design technology continues to gain momentum for digital and custom analog chips. Customer engagements for 20-nm are growing in every region, and Cadence is now working with 16 different customers at 20-nm, with more than 30 designs in progress or already complete using the company's Encounter place-and-route tool, Tan said. At the 14-nm node, Cadence has joint projects underway and is working on test chips, he said.
Cadence (San Jose, Calif.) reported second quarter sales of $326 million, up 3 percent from the first quarter and and up 15 percent compared to the second quarter of 2011. The company reported a net income in accordance with generally accepted accounting principles (GAAP) of $36 million, or 13 cents per diluted share, up 16 percent from the first quarter and up 33 percent from the second quarter of 2011.
On a non-GAAP basis, excluding charges, Cadence reported a net income for the second quarter of $53 million, or 19 cents per diluted share, up 13 percent from the first quarter and up 96 percent from the first quarter of 2011.
Cadence's second quarter results bested consensus analysts' expectations, which called for revenue of $321 million and non-GAAP earnings per share of 18 cents, according to Yahoo Finance.
Cadence said it expects third quarter sales to be between $325 million and $335 million, better than consensus analysts' expectations of about $323 million, according to Yahoo Finance. The company expects to report a net income of 17 to 18 cents per share on a GAAP basis, and 18 to 19 cents per share on a non-GAAP basis. Consensus analysts' forecast that the company would guide for non-GAAP earnings per share of 17 cents, according to Yahoo Finance.
For the full year, Cadence expects sales to be between $1.295 billion and $1.315 billion, an increase from the previous forecast, which called for sales of $1.27 billion and $1.3 billion.