The lukewarm company awards

It is often said in the UK that a kiss of death to a company is to be awarded a “Queens Award for Industry”.  It is not quite clear why companies that win industry awards of this type often struggle soon afterwards, but there are plenty of examples to choose from.  One might have expected the more commercially savvy US media to be more selective in dishing out “hot company” awards but it would seem this is not the case.  One of the more surreal press releases I have seen for some time involves a magazine called START-IT, which concentrates on the manufacturing industry.  Each year they announce 100 companies who are “hot” in their view.  Usually such awards focus on start-up companies, but START-IT does not; it regularly includes industry behemoths in its awards ranks.  Unusual, but fair enough.  However even the most generous observer might struggle to grasp their awarding Cognos one of their “hot company” awards in 2006.  Cognos is a fine company, but let’s just look at their 12 month share price (below).

Chart

Now call me old fashioned, but in what way exactly would a company with this share price profile be considered “hot”?  I suppose the share price has recovered from its lows recently to be only around a third down from its level last September, but is this what one would think of as a “hot” achievement?  It isn’t due to stratospheric revenue or profit growth in 2006, as can be determined by a cursory look at the company accounts.  Certainly Cognos had a decent first quarter, with revenue up 15% (though important licence revenues up just 8%) compared to the same period in 2005.  However this was below the expectations that management had set and you can see the less than wild enthusiasm of the stock market in response to these in the chart below.

Could it be “hot water” that START-IT meant, given Cognos’ unfortunate SEC investigation? (from which they seem to have emerged quite well).  Let’s review the criteria carefully that START-IT apply:

“Companies selected in this category  are those that have made great strides in recent months and are certainly worth keeping an eye on.”

Hmm.  You lost me there.  I should emphasis that I am in no way having a dig at Cognos here, who have achieved tremendous success over the years and are still one of the two clear leaders in business intelligence.  But a “hot” company?  In 2006?

This was not an outlier: the START-IT award judges seem to be using some mystical criteria as to what constitutes “hot”.  Let’s look at the share price of another  “Hot” company award winner, Dassault, over the last 6 months:

Share Chart DAS

This is another example where the shareholders of the company might take some issue with the START-IT assessment criteria.  Again, Dassault is a fine company with a great history, but “hot”?  

I’m not quite sure what the journalists at START-IT are smoking, but I think I need to get hold of some of it.

 

2 thoughts on “The lukewarm company awards”

  1. Are you taking bets on the correct explanation for this odd phenomenon?

    The Cranky Product Manager will that these “not so hot” companies take out advertising in these magazines. Next guess is that the companies’ PR gals are particularly perky and the magazine editors are particularly lonely.

    Oh yes, the Cranky Product Manager is most cynical. But she was made this way through experience, not born to it.

  2. Great post. I was mystified when I saw the release. I thought it was even funnier that Cognos touted the “award” in a press release. I think Agile is a likely canidate for the next winner.

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