Tuesday, July 22, 2008

Where is Cognex headed?

Cognex, as I’ve mentioned before, has a lot of money in the bank, but in recent years the only use they seem to have for it is to buy back stock. Well, based on the press release about the sale of their lane departure warning business, it appears they now have an even larger cash stash.

Students of business will know that companies often struggle when they diversify into new markets, and conversely, that some of the most successful companies stick to what they know, so in making this divestiture, Cognex appear to be playing it safe. But that leaves me wondering just where they are going to find new growth opportunities. While hard-core industrial inspection and code-reading applications will doubtless continue to grow, especially in China and India, is this going to deliver the type of organic growth Wall Street likes to see?

So what’s it to be Cognex – new products, acquisitions, or more stock buy-backs?

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