Blip or trend?

According to their financial results, published earlier today (Feb 17th,) the first nine months of 2008 were very good for Cognex. Unfortunately though, business rather fell off a cliff in the last quarter, with revenues down 21% against the same period in ’07. The fact that they finished the year only 8% down overall shows just how well things had been going prior to the financial chickens coming home to roost.

I did find a few other interesting snippets in their press release:

· Most of the decline seems to have been in Asia and North America, with the result that Europe has overtaken the Americas as their biggest market. Should we infer that Europeans are less willing to cut capital expenditure in response to a drop in sales?

· R&D spending has stayed fairly constant at around $9m per quarter, meaning that it’s jumped up as a percentage of revenue. Kudos to Cognex for not cutting that high-cost activity. (But as I keep asking, where are the blockbuster new products?)

· Inventory turns in Q4 were equivalent to 2.2 times per year. Now I’m no financial wizard, but that seems rather low to me. In my humble opinion, this might present an opportunity for improvement in ’09.

But the big unanswered question (maybe it’s unanswerable,) is, will 2009 see an equally sharp rebound, or is this the new normal?