Autodesk to slash jobs by 10 percent in cloud push

AutoCAD design software maker Autodesk will cut about 10 percent of its workforce in the near term as part of a restructuring plan to accelerate its transition to the subscription-based cloud business.

Shares of the company, which cut about 925 jobs, rose 11 percent to US$50.90 in early trading.

The restructuring comes more than two months after activist investors Eminence Capital LP and Sachem Head Capital reported stakes in the company.

Eminence and Sachem in November also formed an agreement regarding nomination of directors and influencing the Autodesk management.

Sachem, which reported a 5.7 percent stake in Autodesk, had said it intended to engage in discussions with the company on issues such as management, operations, cost structure, and strategic plans.

The involvement of the activist investors was a primary catalyst behind the restructuring, Wedbush Securities analyst Steve Koenig said.

Autodesk, which makes computer-aided design software, said it expected pretax charges of US$85 million to US$95 million related to the restructuring.

Autodesk, which competes with Adobe Systems, Ansys and Dassault Systemes, said it expects the restructuring to result in additional cost savings in fiscal 2017 and beyond.

"If Autodesk remains vigilant on its spending, this restructuring and further vigilance will help long-term profitability," analyst Koenig said.

The company had earlier said that as part of its transition to the cloud it would stop selling upgrades to its licensed software from February.

Autodesk also estimated fourth-quarter billings, revenue, adjusted profit and net subscription additions to be at the high end or exceed its forecast.

Subscription revenue accounted for about 53 percent of the company's total third-quarter revenue.

The company in November forecast fourth-quarter adjusted profit of between 8-12 cents per share on revenue of US$620 to US$640 million.

Analysts on average were expecting a profit of 10 cents per share on revenue of US$631.1 million, according to Thomson Reuters I/B/E/S.