Cadence Design Systems (CDNS)

We expect that a turnaround is going to take time for Cadence Design Systems (CDNS - Analyst Report) due to mounting financial problems leading to lackluster growth. The company reported weak 2008 results and provided guidance for a poor 2009.

We have lost confidence in the company's ability to survive in the market and show healthy fundamentals. Cadence has been losing share to Synopsys and is struggling through a downturn in the semiconductor cycle. Cadence also withdrew its bid for Mentor Graphics in 2008, further dimming its growth prospects.

Cadence recently came out with enhanced version of its products, but it will take time for these to generate additional revenue. We maintain a Sell rating on the shares and maintain our six-month price target of $2.50.