I have three ways of gauging the health of the machine vision industry: I measure how long it takes a salesman to return my call, (longer equals busier,) I count how many times a week a salesman wants to stop by to show me a new product, (more means less busy,) and I look at the Cognex financials.
Right now the first two measures say business is good, so let’s see if the Cognex third quarter results confirm that finding. (Here’s a link to their pdf.)
Some interesting points caught my eye. First, to summarize, sales are up over Q3 2010 and year-to-date 2011 versus same point in 2010. But income (or profit for any Brits reading – I know you’re out there,) is down. Obviously then, expenses have increased, but which ones?
Well Dr. Bob has two explanations: the sales team is growing, and they’re putting more money into R&D.
To the first point, one might expect that a bigger salesforce would equate to more sales – in fact shouldn’t it be a somewhat linear relationship? – but I suppose there’s a lag while the new hires ramp up. And to the increased R&D spend – well that ought to be good, but I must confess to wondering what all those boffins in Natick are actually doing. I mean, we don’t seem to be awash in new product announcements.
I also noticed that yet again, Cognex can find nothing better to do with their piles of cash than return it to shareholders and buy back their own stock. Neither of these is exactly bad, but they do seem be indicative of a business that has matured and is no longer pouring forth innovations.
So what should they be doing? Well allow me to make two points. First, perhaps they want to look closely at their innovation processes. Maybe they need a skunk works to come up with the Next Big Thing. And second, perhaps a few strategic acquisitions? After all, there are quite a few innovative little machine vision start ups out there, and some might have some good ideas.
There again, Cognex is doing very nicely as it is, so maybe they’re following the “if it isn’t broke, don’t fix it,” strategy.
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Allow me to interject that Cognex is not sitting on their haunches when it comes to providing and improving products that meet the needs of industry. This past year they introduced the DataMan 500 reader with the VSoC (vision system on a chip) technology. By integrating the image chip onto the same chip that locates and decodes a one or two dimensional barcode they can capture up to 1000 images a second and decode up to 90 one dimensional barcodes a second. The algorithm improvements they have made and the speed of this unit make it possible to perform applications that laser based code readers struggle to do. They have made improvements and added tools to the In-Sight software that make it easier to set up and manage applications that have been difficult to perform otherwise (i. e. bead tracking tool). Watch for other new products and improvements in the year to come. While they may not be inventing products that will take the world by storm, they are making incremental advances that make the current applications easier to handle.
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