Revenues of $228 million (at the high end of guidance) License revenues of $77mm - $78mm (down year over year and below expectations) EPS to "exceed the company's July 21st outlook" The company is laying off 6% of its workforce, primarily in the middle management layers; but will be hiring 25-30 more bag carriers Final and detailed financial results are scheduled for release on September 21st
Basically it was a mixed bag, but the license revenue line was disappointing. On the conference call, several sell-side analysts took issue with the company's bullishness in the face of disappointing license traction nine months into the company's release of Cognos 8.
Typically, particularly given current market conditions, that would have been enough to pound the stock. But the stock finished down just $0.10 on the day. When one considers that Cognos' stock is up considerably from its July lows, the lack of price degradation was all the more curious.
Or perhaps it's not curious at all. Speculation has been rampant for some time that Cognos is a potential acquisition candidate. Is today's lack of price action in the face of negative news an indication that speculative investors are buying into the M&A chatter? Or was this more a reaction to the fact that Cognos' layoffs could potentially drive operating margins back up to respectable levels?
I've been critical of the state of the BI market for some time. These companies have grown in no small part through acquisition and are now facing far less differentiation between them. Several months ago I wondered if the Hunters would become the Hunted. It will be interesting to see if those speculating on Cognos' prospects as an M&A candidate are rewarded for their willingness to look past another disappointing fundamental result.
COGN 1-yr Chart
Note: At the time of this writing I, and/or funds I maintain discretionary control over, did not maintain an equity position (long or short) in COGN.