( ESNUG 303 Item 1 ) ---------------------------------------------- [11/4/98]
From: [ A Little Bird ]
Subject: Cadence Lays Off 1/3 Of Its Spectrum Consulting Division
John,
Looks like your noisy predictions about Cadence Spectrum Services finally
came true. Good call! Got any other predictions I should know about?
By any chance do you know what the Megabucks numbers are going to be next
Wednesday? :) If you print this, keep my name out of it.
- [ A Little Bird ]
From www.eet.com:
Cadence Closes Multiple Design Centers, Lays Off 600
By Michael Santarini
EE Times
(11/04/98, 10:36 a.m. EDT)
SAN JOSE, Calif. (EE Times) - Cadence Design Systems will close down
several of its design centers in the coming months, laying off roughly
1/3 of its front-end design services division, according to sources
inside the company.
The sources, who were told they are losing their jobs at the end of
the year, said the company is laying off 400 front-end and
mixed-signal engineers from its design services division and 200
people from sales and management, roughly a third of its 1,800 design
services employees.
Over the next few months the company will close design centers in
Chelmsford, Mass.; Rochester, N.Y., Toronto; Orlando, Fla.; Tempe,
Ariz.; Arden Hills, Minn.; Milan, Italy; Bracknell, United Kingdom;
Tredifferin, Pa. and will consolidate its services into its centers in
Cary, N.C.; Austin, Texas; San Jose and San Diego, the sources were
told by management.
A Cadence division manager told the sources that Cadence was having
troubles in the design services business and needed to cut down its
cost structure.
News of the layoff comes as a surprise in light of recent comments
made to EE Times in Edinburgh, Scotland by Jack Harding, president and
chief executive officer of Cadence. Harding said that Cadence's Design
Services business was doing well and that the company planned to hire
more engineers for its system-on-a-chip design center in Livingstone,
Scotland.
The layoffs at Cadence seemingly puts to rest the belief that design
jobs would not be effected by the industry's economic woes.
John Cooley, an independent consultant and long time critic of
Cadence's expansion into the design services arena, said the layoffs
at Cadence were inevitable.
"I said it three years ago and surprise, surprise" said Cooley. "In
April of 1995, I wrote a letter to the editor in EE Times that said
pimping out Cadence's designers wasn't a good idea, and if you sell
$10 million of design consulting, you can end up paying $6-to-$17
million in labor to actually service the customer. And if you sink $10
million in creating a new EDA/CAD tool, you can bring back $10-to-$50-
to-$150 million in revenue. Consulting just isn't as lucrative as
selling good products. Now Cadence, and unfortunately the engineers
Cadence stole from customers, are learning that the hard way."
Late last month, Cadence reported lower than projected design services
revenue for its third fiscal quarter of 1998. Services revenue for the
third quarter was $67.704 million, while cost of services was $50,061
million. Analysts expected the company's Q3 revenues would be well
over $70 million.
Cadence is expected to officially announce the layoffs later today
(Nov. 4).
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