Sunday, November 16, 2008

Sitting on top of a mountain

Cognex is a very successful company. They have excellent products, strong marketing, and give their customers the tools they need to get the job done with minimum fuss and bother. So perhaps we shouldn’t be surprised to see that, according to the Q3 financial results, they are sitting on a pile of cash. A pile $236 million high.

If I was a shareholder (I’m not) I’d be asking why they aren’t putting that money to work. Yes, they’ve been buying back their own stock, but wouldn’t it be better to seek out new growth opportunities?

The market for industrial machine vision will continue to expand for a good few years, but I think there’s some industry-wide consensus that the real opportunities are going to be in automotive, security and, to a lesser extent, medical applications. So are Cognex planning a leap into one or more of these?

The sale last July of their fledgling ‘Lane Departure Warning’ business would suggest the opposite; that they intend to stay focused on what they know. But with R&D expenditure running at $36m a year, they must be working on something exciting.

The question is, what?


Anonymous said...

By closing the old DVT office in Atlanta and laying off 7% of their workforce, it seems Cognex has finally turned the page on their $115 million debacle. Still, I miss the old days of DVT: Bob Steinke, servant leadership, Framework...

As for all that money in the bank, Cognex is already putting it to good use. It's called the "Make Dr. Bob Richer" plan. As long as there is money in the bank, you should expect Dr. Bob to continue to give himself raises (through increased dividends).

B G said...

I believe that last paragraph regarding "Dr. Bob" may be inaccurate. Look here:

for details.