Layoff next week?
Valera said the next big data point awaited by Wall Street is how many workers will be laid off in what has been characterized by Cadence as an aggressive restructuring. Valera said he initially thought Cadence would cut 10 to 15 percent of its workforce, but noted that there have been consistent though unconfirmed rumors that the cuts will be more like 20 to 25 percent. Valera said its rare for a large EDA company to make cuts of that magnitude.
Valera said he expects Cadence to provide exact numbers during its earnings call scheduled for Oct. 22. "They've basically promised that to The Street," Valera said. He added that he expects the cuts to be across the entire company, noting that Cadence has been clear that they will include deep cuts in R&D.
Smith wondered if the management shakeup would delay the layoff announcement. Cadence may hold off on making deep cuts until a new management team is in place, he said. Cadence has announced an Interim Office of the Chief Executive to oversee the day-to-day running of the company's operations.
Smith suggested that Cadence might be able to postpone a layoff because Wednesday's resignations remove some hefty salaries from the company's books. According to a proxy statement filed with the U.S. Securities and Exchange Commission in March, Fister's total compensation was more than $13.5 million in 2007. The total compensation of the five executives who resigned Wednesday was more than $26 million, according to the filing.
The San Jose company also will likely update its outlook on Oct. 22, Valera said, noting that the macroeconomic outlook has probably deteriorated since Cadence provided guidance on its second quarter results.