The worst is behind us

Well that seems to be the message from Cognex today (Feb 11th) as they publish their full year 2009 results. The numbers certainly weren’t pretty, with revenue for the full year down 28% and a loss of nearly $5m versus a 2008 profit of over $30m, but Dr. Shillman seems convinced 2010 will be better.

What evidence does he have? Well apparently 4th quarter revenues were up in North America and Asia, with just Europe dragging down performance. But there is an admission that “certain large orders were discounted more than normal.” This would seem to mean that they’re buying market share, and as my old finance professor used to say, “loss leaders lead to losses.”

Of course, Cognex are still in good shape with positive cash flow and money in the bank, so the situation is far from dire. What does concern me though is the way they’ve taken an axe to R&D spending. Contrast this with the approach to cost-cutting taken over at Dalsa: R&D at the Ontario vision giant was completely spared from the pain the rest of the organization had to feel.

If I was a Cognex stockholder (I’m not,) I’d be asking what the new product pipeline will be bringing forth over the next couple of years. I feel sure that the cutbacks must have resulted in cancelled and delayed programs and I have to wonder what this means for future prospects.