The semiconductor sector is in fine shape these days. Demand for consumer-level computers, smartphones, and general gadgetry has recovered from the dark days of 2008 and 2009, and the logical result is rising investment in chip-manufacturing facilities and new semiconductor designs.
That's where Cadence Design Systems
It doesn't hurt Cadence any to be a part of the chip-manufacturing alliance between IBM
Still, Cadence doesn't quite face blue skies ahead. The company is improving its gross margin quarter by quarter, but what looks like undisciplined cost controls don't allow improvements to flow all the way to the bottom line, and actual earnings are sporadic at best. Cadence reported a GAAP net loss of $21.2 million this quarter, though restructuring and stock-based compensation adjustments brought the red ink back into the black.