"Cadence Design Up Amid Rumors That Analysts Deem Untrue "
Dow Jones Newswires -- August 18, 1999
NEW YORK (Dow Jones)--Cadence Design Systems Inc.'s (CDN) shares surged 15% Wednesday on heavy volume amid speculation that Hewlett-Packard Co. (HWP) was eyeing the company as a takeover target.
One analyst, who wished to remain anonymous, noted that investors were bidding up the shares based on rumors published in the Rumor Room section of financial Web site, JagNotes.com, which earlier indicated that Hewlett planned to buy Cadence for $18 a share.
However, some analysts and market watchers maintain that rumors of a
combination between the two companies are unfounded.
"I would not look to a takeover by Hewlett-Packard. That just doesn't make any sense," said Needham & Co. analyst John Barr.
A Cadence spokesperson wasn't immediately available for comment. Citing company policy, a Hewlett-Packard spokeswoman said the company would "neither confirm nor deny any plans that may or may not be under way."
Barr believes recent interest in Cadence's stock was spurred by a piece in the latest Barron's, which detailed two insider purchases of 50,000 shares each.
According to Federal Filings, one of those stock buys was reportedly made by Cadence Chief Executive and President H. Raymond Bingham on July 23 at a price of about $10.81 a share. That boosted Bingham's total direct holdings to 52,575 common shares at the end of July.
The other 50,000-share transaction was made by Shane Robinson, the
president of Cadence's design productivity group. Robinson bought his
shares on July 26 for $10.69 each, boosting his total holdings at the end of the month to 52,176 common shares.
"It's management showing confidence in the company's business," Barr said.
Daniel Myers, an analyst at Lehman Brothers, agreed. He noted that the two transactions are helping to recover investor confidence after a disappointing second-quarter earnings report and concerns about the company's competitive viability drove its shares to a "severely oversold" position last month.
"Investors are starting to realize that Cadence has not lost their position in the industry," Myers said.
The San Jose company's shares settled 1 1/2, or 14.6%, higher Wednesday at 11 3/4 on Nasdaq volume of nearly 5.2 million shares, about twice the average daily volume of 2.6 million shares.
-Nicole Ridgway; 201-938-5670
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