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Cadence Designs Systems (NASDAQ:CDNS) Wednesday night announced that it has completed its previously disclosed earnings and revenue restatement to correct some revenue recognition issues. The company also announced Q3 results which were light at the top line, and provided guidance that disappointed the Street. Put it all together, and you get more disappointment from a company which was already in the Street’s dog house.

Cadence posted Q3 revenue of $232 million, and a non-GAAP loss of 9 cents a share; the Street had expected $239.3 million and a loss of 11 cents.

Meanwhile, the restatement reduced March quarter results to a loss of 11 cents a share, from a loss of 7 cents; the June quarter is restated to a loss of 7 cents a share, from a profit of 2 cents. Combined, the EDA software company reduced revenue for the first six months of the year by $37.9 million.

For the December quarter, Cadence now sees revenue of $215 million to $225 million, below the Street consensus of $247.4 million. The company expects a non-GAAP loss for the quarter of 4-6 cents a share; the Street had been expecting a loss of 7 cents.

Analysts point out that Cadence also projected bookings for 2009 of $800 million to $900 million, which Deutsche Bank’s Tim Fox notes is about 20% below what the Street had expected; in response, analysts dramatically reduced their revenue expectations for 2009 from around $1 billion to about $800 million.

In a research note, Fox repeated his Hold rating on the stock, cutting his target to $4, from $5.

Other analyst made similar moves: Merrill Lynch’s Jay Vleeschouwer, for instance, repeated his Underperform rating, and cut his target to $4.50, from $5.50, noting that the company indicated it would have “virtually no operating cash flow next year” versus a prior forecast of $250 million.

Standard & Poor’s analyst Jim Yin
cut his rating on the stock to Sell from Hold, reducing his price target to $3.50, from $4. While the accounting issues have been solved, he notes that the company still has no CEO, and that it faces “a difficult transition amid an economic recession.” He widens his ‘08 loss estimate to 93 cents from 37 cents; for ‘09, he now sees a loss of 45 cents a share, versus a profit of a penny a share previously.

CDNS Thursday closed down 22.6%.

Source: Dismal Outlook for Cadence After Restatement