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Technology Stocks : Cadence Design Systems
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To: yihsuen who wrote (361)4/21/1999 4:40:00 PM
From: arnie h   of 668
 
Yishuen: Here's my take on why the analysts are trashing CDN. As I noted in a previous message, there were 4 analysts from major brokerages that reiterated buy recommendations as late as last month. To me this means they talked at length with company management and believed that things were in good shape for the rest of the year. Now they find that sales and earnings for the year are projected to be slower, and the slowing must be significant such that annual projections are out the window. As a consequence, analysts feel deceived and have no confidence in management. Thus, they trash the stock since their own reputations are affected by what they consider to be management duplicity. Because of the nature of the brokerages involved here, I would guess management won't survive and we'll see a new CEO and CFO before very long. Compounding management's problem will be class action suits from lawyers who wait for this kind of a situation. We have to remember that accounting changes had to be made and that repricing of options is another contestable aspect by major stockholders who have now lost money.

Finding a new CEO is always a task and sometimes a company in trouble will call back a founder to do this (ala Steve Jobs). Wonder what Joe Costello is doing now?

Arnie H
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