Cadence CEO resigns

Cadence Design Systems announced that its chief executive officer, Joe Costello, has abruptly resigned. His successor already has been named.

3 min read
Cadence Design Systems (CDN) today announced that its chief executive officer, Joe Costello, has abruptly resigned.

Jack Harding, who served as president and CEO of Cooper & Chyan technology (CCT) until its merger earlier this year with Cadence, will now take over Costello's role. Harding, who most recently served as senior vice president of Cadence's strategic business group, will assume Costello's position immediately.

Costello spearheaded the company's fight against competitor Avant (AVNT) over allegations of trade-secret theft, and recently came up as a possible Apple (AAPL) CEO candidate. He is leaving Cadence to join an educational software company, Knowledge Universe.

Costello will serve as vice chairman of Knowledge Universe, which is partly owned by notorious former junk-bond king Michael Milken, Oracle (ORCL) chairman Larry Ellison, and other investors. Milken serves as chairman of Knowledge.

"It is with mixed emotions that I hand over the reigns of Cadence to Jack, but I am supremely confident in his and the rest the executive team's ability to execute on the vision we have laid out for the company," Costello said in a statement. "I am excited about the opportunity that I am taking on at Knowledge Universe and the potential for making a significant contribution to education in the world."

Costello's resignation comes after more than 13 years at the helm of Cadence and its predecessor, SDA Systems. Costello has resigned from Cadence's board of directors as well, and Harding will assume his board seat.

Harding has worked with Cadence's executive team for almost a year. He officially joined the company last May, when the deal between Cooper and Cadence closed, but has been working with the software tool maker since the deal was first announced about a year ago.

"Cadence's vision is in place and we have an extremely strong management team to execute on it," Harding said in a statement. "The company is coming off its best quarter ever, and the elements that made it possible--technology leadership, continued execution of our services model, and the breadth and depth of our worldwide organization--are firmly in place to position us for continued growth and success."

Now is a good time for a turnover, said Mike Sottak, a company spokesman. "Everything is clicking," he noted, adding that Cadence's financial performance, technology foundation, and management team will make the CEO transition relatively painless.

Last week, Cadence announced that its third-quarter revenue increased to $234.9 million, up from $188.7 million a year earlier. The company attributed the improvement to key product-line growth in logic-simulation and physical-verification software and tools. Net income grew to $55.3 million, or 48 cents a share, compared with net income of $32.7 million, or 36 cents a share, a year ago.

But without Costello, questions arise over who will lead the continuing charge against competitor Avant and steer the company through various legal wranglings.

Several years ago, Costello launched a war against software tools developer ArcSys, after one of his engineers discovered 4,000 lines of identical Cadence code in the competitor's software. That was the start of what's been a long-running trade-secret case between Cadence and Avant, ArcSys's predecessor.

Costello has won a number of milestone rounds this year in the case against Avant--from claiming vindication when six Avant executives were charged with trade-secret theft and conspiracy by the Santa Clara County district attorney's office in April, to winning a federal appeals court ruling last month that placed a preliminary injunction on an older version of Avant's software. The latter victory also may pave the way for extending a similar decision to Avant's flagship product.

Sottak said the legal battle with Avant, which has been brewing since 1994, is just one small part of the Cadence story, and that Harding is equally as adamant about the vindication of Cadence as Costello was.

Costello's departure also quashes any rumors of his departure to troubled computer maker Apple. Costello, in an earlier interview, acknowledged that his name was placed on a list of potential CEO candidates for Apple and submitted to its board by Apple's headhunter.

But Costello had said in an interview with NEWS.COM that he had no interest in the job.

"I'm not even considering that," Costello had said, adding, "It was a compliment to be put on the list. I think the story with Apple is that everyone wants it to succeed--really."