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Synopsys plunges after downgrades, CFO resignation

Synopsys Inc. (Nasdaq: SNPS) dropped 17 percent Friday as analysts hit shares with a slew of downgrades after the company announced the resignation of its chief financial officer.

Shares in the company, which makes software design tools for the semiconductor industry, were down 8 3/8 to 38 3/8 .

The stock got four downgrades Friday; Robertson Stephens lowered the stock to "long-term attractive" from "buy," Morgan Stanley Dean Witter to "neutral" from "strong buy," Goldman Sachs to "market outperform from "recommended list," and Merrill Lynch to "neutral" from "accumulate."

Lehman Brothers also cut Synopsys' price target to $56 from $67 and Credit Suisse First Boston trimmed its earnings estimate on the stock and cut its price target to $75.

A lone analyst from Needham & Co., John Barr, raised his rating to "strong buy" from "buy," but lowered his price target to $65 from $75.

The analyst action was triggered after Synopsys said Thursday its CFO Dave Sugishita, is leaving after three years with the company. It has named Steven Shevick as its interim chief financial officer and senior vice president of finance.

The bad news came after the company's first-quarter results, reported after Thursday's bell. The company hit estimates and said it was pleased with strong results, and is gaining market share in all key product categories.

Revenue for the first quarter of fiscal 2000 was $216.9 million, compared with revenue for the same period last year of $180.2 million, an increase of 20%.

Earnings before goodwill (EBG), which represents earnings per share on a fully diluted basis excluding amortization of intangible assets and in-process research and development, was $50.7 million, or 68 cents a share, in line with than First Call's expected profit per share. Results improved compared with the $40.4 million, or 56 per share, reported for the first quarter of fiscal 1999.

Net income for the first quarter of fiscal 2000 was $45.1 million, or 61 cents a share, a slight improvement over net income of $40.4 million, or 56 cents a share, for the first quarter of fiscal 1999.

In other news, Synopsys announced Friday its board has authorized a stock repurchase program that will allow it to buy back $200 million in stock. Under the program, share purchases may be made in the open market at prevailing prices beginning immediately and ending at the end of calendar year 2000. The purchases will be made from existing capital.