Cadence Profit Tops Street; To Acquire Jasper For $170 Mln. - Update

(RTTNews) - Application software maker Cadence Design Systems Inc (CDNS), Monday reported a decline in first-quarter profit, hurt mostly by expenses that offset growth in revenues, while the prior year quarter included a tax benefit. Nonetheless, results for the quarter topped Wall Street estimates.

Moving forward, Cadence provided weak adjusted earnings for the second quarter, while revenue guidance appears strong.

Cadence also said it has agreed to acquire Jasper Design Automation Inc for about $170 million in cash, in a bid to enhance its verification capabilities. Cadence expects to close the Jasper deal in the current quarter, and anticipates the deal to be accretive to adjusted earnings in fiscal year 2015.

Following the announcements, Cadence shares slid over 5 percent in the initial after-hours trade on the Nasdaq. The stock later pulled back to end the day's close at $14.84.

Cadence develops electronic designs, automation software and emulation hardware for semiconductor and electronics systems firms.

The San Jose, California-based company posted quarterly net income of $33 million or $0.11 per share, compared with $78.6 million or $0.27 per share last year.

Results for the prior year included a $34 million tax benefit.

Excluding items, adjusted earnings for the quarter were $59.4 million or $0.20 per share, compared with $60.6 million or $0.21 per share a year ago. On average, 10 analysts polled by Thomson Reuters expected earnings of $0.19 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the first quarter climbed to $378.6 million from $354 million in the prior year. Analysts expected revenues of $376.80 million for the quarter.

Results were largely offset by expenses that climbed to $336 million from $296 million last year, partly on amortization and stock-based compensation expense.

For the second quarter, Cadence projects net earnings of $0.10 to $0.12 per share, adjusted earnings of $0.19 to $0.21 per share and revenues of $370 million to $380 million. Analysts currently expect earnings of $0.23 per share on revenues of $372.17 million for the quarter.

For 2014, Cadence now expects net earnings of $0.56 to $0.66 per share and revenues of $1.550 billion to $1.590 billion. Earlier, the company projected net earnings of $0.55 to $0.65 per share and revenues of $1.550 billion to $1.585 billion. The company continues to expect adjusted earnings of $0.92 to $1.02 per share.

Analysts currently expect earnings of $0.97 per share on revenues of $1.57 billion for full year 2014.

Detailing the Jasper acquisition, Cadence said Jasper is a technology leader in the fast-growing formal analysis sector, providing multiple verification solutions built on the JasperGold platform. Jasper's customers include many of the top systems, semiconductor and IP companies. As of December 2013, Jasper had about $24 million of cash, cash equivalents and short-term investments.

Cadence stock closed Monday at $14.84, down $0.02 or 0.13%, on a volume of 2.8 million shares. In after hours, the stock gained 0.02 percent.