Cadence Design Systems CDNS (NASDAQ), which had a major CEO change earlier in the month (see post), according to CFO.com announced it,
is restating its financial restatements for the first two quarters of 2008 to correct $24 million in revenue recognition errors. It is also reviewing how customer contracts signed during the first quarter were recognized instead over the duration of the contracts, beginning with the second quarter.
The announcement could not come at a more difficult time. With a new CEO in charge along with other key managers the company must now focus on this issue. According to the CFO.com article,
Cadence is hardly the only software maker to get snagged by revenue recognition issues. And although it seems too early to say if there’s any relation between the current company issues and broader industry problems, software makers have been struggling with the accounting rules for years over the booking of sales.
Keep a close eye on when the company manages to put out its stalled third quarter earnings and how it deals with this latest difficulty.
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