Chip design software firm Cadence forecasts sales below expectations, shares fall
By Arsheeya Bajwa and Stephen Nellis
April 22 (Reuters) -Cadence Design Systems CDNS.O forecast second-quarter revenue below analysts' estimates on Monday, as the chip design software maker faces intense competition from its primary rival Synopsys SNPS.O.
Cadence expects revenue to be between $1.03 billion to $1.05 billion for the quarter, a range that was lower than analysts' average estimate of $1.11 billion, according to LSEG data.
Its shares fell more than 7% in extended trade. Cadence said it expects full-year sales of $4.56 billion to $4.62 billion, a range with a midpoint in line with analyst estimates of $4.59 billion.
Nimish Modi, senior vice president of strategy and new ventures at Cadence, told Reuters the company's revenue growth will be weighted toward the fourth quarter of this year.
A new generation of the company's Palladium supercomputer to help design chips and software faster will go on sale in the third quarter, with sales ramping in the fourth quarter, Modi said.
"Customers are waiting for these systems," Modi said. "We're taking orders, but it's going to take a while for this thing to ramp up as we go into the second half."
Cadence and Synopsys are benefiting from more companies designing their own chips and the systems they go into. While the two companies have long been roughly equal in market capitalization, Synopsys' could be come larger if it closes its $35 bid for engineering software firm Ansys ANSS.O.
Cadence's quarterly revenue declined for the first time in more than 14 years according to LSEG data, falling 1.3% to $1.01 billion for the quarter ended March, roughly in line withmarket expectations of $1 billion.
The company had attributed the decline to higher-than-normal shipments in the year-ago period to clear order backlogs for hardware products, making up for a tough comparison.
The company expects adjusted net income in a range of $1.20 to $1.24 per share for the second quarter, compared to estimates of $1.43.
The company also raised the midpoint of its annual adjusted profit forecast to $5.93 per share from its earlier midpoint of $5.92. Analysts expect $5.94, according to LSEG data.
Reporting by Arsheeya Bajwa in Bengaluru and Stephen Nellis in San Francisco; Editing by Jamie Freed
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