CDNS: What a difference a year [or 2] makes

We’re coming up on almost four years, full on, since the momentous events of 15 October 2008 when the entire top executive team at Cadence exited stage left.

At the time, of course, the world was paying a shade less attention to EDA, and a shade more attention to a global crisis unfolding minute-by-minute featuring household concepts such as bankruptcy, subprime mortgages, and derivatives, and household names such as Lehman Brothers, AIG, Merrill Lynch, Bank of America, Goldman Sachs, Morgan Stanley, Washington Mutual, JPMorgan, Wachovia, CitiGroup, and the FDIC, to name a few.

Meanwhile, the folks who held CDNS in mid-October 2008 were holding shares that had lost almost 80% of their value over the previous 12 months, plummeting from $20+/share to around $4/share in that time frame.

The world may have been consumed by news of the larger global meltdown in October 2008, but various CDNS shareholders were sufficiently focused on the disaster at Cadence to precipitate upwards of a dozen class-action suits against the company in protest.

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Fast forward just short of four years, to July 2012, and the world’s a different place. The global crisis has subsided to a dull and constant roar, and there’s clearly been a lot of water under the bridge in EDA.

Lip-Bu Tan, long-time member of the Cadence board of directors, has been at the helm as CEO now for over 3 years; the widely-touted EDA360 initiative and its evangelist(s) have come and (sort of) gone; the industry’s learned how to spell Carl Icahn; Denali and Magma are no more; and Synopsys has emerged as the 800-pound gorilla in EDA (market cap hovering around $4.5 billion, compared to Cadence at around $3 billion and Mentor at around $1.7 billion).

But the biggest sign-post that the world has changed since October 2008? This text from the July 25th Press Release announcing Cadence’s second quarter 2012 revenue:

“The Cadence team executed well again in Q2,” said Lip-Bu Tan, president and chief executive officer. “Our 20-nanometer engagements have expanded, use of our Azuro technology acquired in 2011 increased, our emulation business significantly exceeded expectations, we had a strong quarter for both design and verification IP, and the acquisition of Sigrity has significantly enhanced our printed circuit board product line.”

Cadence reported second quarter 2012 revenue of $326 million, compared to revenue of $283 million reported for the same period in 2011. On a GAAP basis, Cadence recognized net income of $36 million, or $0.13 per share on a diluted basis in the second quarter of 2012, compared to net income of $27 million, or $0.10 per share on a diluted basis in the same period in 2011.

What does it all mean? It means that the shareholders are delighted, and the share price rose a cool 5% today alone.

If you insist on turning the clock back 5 years, CDNS still sits at about 40% below its July 2007 value [roughly $12 today, versus $20 in July 2007].

But if you are a little more generous in your outlook and only turn the clock back 2 years, CDNS today sits  at about 80% above its July 2010 value [$7 in July 2010, versus $12 today].

That’s impressive, and a performance that leaves SNPS and MENT in the dust.

(Chart from Yahoo Financials.)

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Tags: Cadence, CDNS, Denali, EDA, EDA360, Lip-bu Tan, Magma, MENT, Mentor Graphics, SNPS, Synopsys

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