Cadence Design Systems Inc., the world-leading manufacturer of software used in the design of computer chips, reported a doubling of quarterly profit on the back of strong demand for tools used to construct low-power semiconductors. Net income rose to $59.6 million ($0.20/share) from $30.4 million ($0.10) in the year-ago quarter (see earnings call transcript). Revenue increased 9.1% to $391 million, ahead of analyst expectations of $383.3 million. Excluding items, EPS were up to $0.30 from $0.23, beating analyst forecasts by a penny. Sales were up 23% for digital integrated chip design products, Cadence's biggest business. Functional verification product revenue gained 16%. For Q3, Cadence is forecasting revenue of $395-405 million, with EPS of $0.31-0.33 excluding items. Analysts are expecting EPS of $0.32 on revenue of $399.3 million. For full-year 2007, Cadence has bumped up its revenue forecast to $1.59-1.64 billion from $1.58-1.63 billion. The company is projecting full-year EPS excluding items of $1.28-1.36, an increase from $1.27-1.35. Analysts are expecting revenue of $1.62 billion and EPS of $1.33. In June, Cadence shares went up on a report that the company was in talks with KKR and Blackstone about a buyout. They fell again when another report said talks had foundered over price.
Sources: Press release, TheStreet.com, Reuters, Bloomberg, MarketWatch
Commentary: Beat and Raise May Not Be Enough For Cadence and Terex • Cadence Buyout Talks with Blackstone, KKR Suspended -- NYT • Private Equity to Buy Cadence Design Systems?
Stocks/ETFs to watch: CDNS. Competitors: LAVA, MENT, SNPS. ETFs: EMV, IGV, PSJ
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