Along with everyone else in EDA, I howled with laughter at one quote in Mike Santarini's story "Cadence struggles to regain rhythm" (see Sept. 15, page 1; www.eedesign.com/news/OEG20030915S0037).

"The company has 134 vice presidents worldwide out of 5,000 employees," Mike wrote. "But what stings many employees is how many managers from tiny Simplex Solutions, a company acquired in June 2002, have taken over top Cadence management slots."

Then came the quote that had everyone abuzz: " 'We call this Penny's reign of terror,' said [a] Cadence employee."

I hate to admit it, but if I were in Penny Herscher's shoes, Mike probably would be citing complaints about "John's reign of terror."

Imagine you're Herscher. You own 215,000 shares of Cadence stock-2.7 times the 80,000 shares owned by Cadence CEO Ray Bingham. The shares have hovered around $13 for the past 18 months.

Then and now

When you joined Cadence in the second quarter of 2002, Cadence had 5,761 employees and was taking in an annualized $240,000 per employee. By this year's second quarter, that had dropped to 5,178 employees contributing $213,000 each to revenue. In dangerous contrast, your biggest rival, Synopsys, earned $275,000 in revenue per employee in this year's second quarter.

And you've gotten no help from the Federal Trade Commission, which despite your legal department's best efforts let the No. 2 and No. 4 EDA players-Synopsys and Avanti-merge. Now Synopsys is the No. 1 player in EDA, and Cadence is No. 2. Not good.

In short, you've dropped behind your competition. Just to keep up financially, either Cadence revenue will have to go up 29 percent (which ain't happening) or you'll have to trim your head count by 22 percent just to match Synopsys' $275,000 in revenue per employee.

It's not Penny's reign of terror. It's business.

John Cooley runs the E-mail Synopsys Users Group (ESNUG), is a contract ASIC designer and loves hearing from engineers at jcooley@TheWorld.com or at (508) 429-4357.