Financial review

Today it’s the turn of Basler under the financial spotlight. Let’s see what we can deduce from their Q3 2011 results, published November 10^th.

In the commentary there’s a lot of talk comparing the first three quarters of 2011 with the same period in ’10. That’s hardly surprising because those numbers look good: revenues, gross margin, earnings per share, cash flow all improved. But third quarter comparisons don’t look quite so attractive: Revenues down 16%, earnings per share down 13%. Cash flow however was very strong, up 81%.

So what’s behind these numbers? Allow me to make three observations:

• Headcount is up somewhere around 10%. At the same time, R&D and administration costs have increased.
• The Solutions business seems to be struggling. Costs have been cut to match the decline in revenues but I have to wonder how much longer Basler want to be in this business.
• Surveillance cameras are a bright spot, sales having doubled from Q3 2010.

What does this mean for the machine vision industry as a whole?

Clearly, it’s hard to make money in solutions. Selling hardware seems more lucrative. Also, it’s a competitive, product-led industry, hence the need to pump more resources into R&D.

And is there an industry-wide downturn? Basler say there has been a “cyclical downturn.” I’m not convinced though. I don’t recall the Cognex numbers suggesting a dip. I didn’t get to Vision 2011 this year but I’m curious what the mood was. Any readers care to comment?