Cadence shares tumbles on news it may restate 1Q
Thursday October 23, 11:14 am ET
Cadence Design shares tumble on news it may restate 1Q earnings, delays 3Q report
MILWAUKEE (AP) -- Shares of Cadence Design Systems Inc. tumbled on Thursday after the electronic design software maker delayed its third quarter earnings pending a review of its first quarter, which it said would likely lead to a restatement.
Shares fell $1.40, or 32 percent, to $2.92 in morning trading Thursday, following the company's announcement after the market closed Wednesday. The company's stock set a new 52-week low of $2.70 earlier in Thursday's trading. It has ranged from $4 to $21.93 over the past year.
The company was due to announce its third-quarter earnings on Wednesday but said instead it was delaying that pending a review of its financials. It started the review after preliminary findings for its third quarter showed about $24 million of revenue related to contracts signed during the first quarter were recognized then, and not throughout the duration of the contracts.
The company said in a news release it expected to restate its financial statement for the first quarter and the first half of the year "to correct the revenue recognition with respect to these contracts."
Cadence said it would release its third-quarter results as soon as possible.
Cowen analyst Raj Seth said in a research note Thursday that it was unclear how long the review would take.
"It's not that difficult to imagine a mistake -- we hope that's all that this is," he wrote.
RBC Capital Markets analyst Mahesh Sanganeria said in a research note that "we could be looking at a slippery slope if the review extends beyond" the first quarter.
"A review covering periods involving changes to revenue recognition models could open a can of worms," he wrote. "A prolonged review resulting in extended non-filing of financials would have serious consequences."
"It was the best of times, it was the worst of times; it was the age of wisdom, it was the age of foolishness;
-- Charles Dickens
