Cognos treads water

I have written before about how the pure play vendors face considerable pressure in what is a more saturated market than they believe.  Further evidence of this theory being borne out comes with the latest results from Cognos, which although on the surface looked OK with an 8% revenue increase, in fact hid a year on year decline in license revenue. Ten deals of $1 million in the quarter is also down from last quarter. The company announced that it was laying off 210 staff, though it continues to invest in its sales force.  The sales force managed to sell $210k of license per rep in the last quarter, which is not exactly stellar given Cognos well known brand and its position as the number 2 player in the BI space. 

Profit margins are a still healthy 13%, but this compares to a peer group average of 16.3%, and full year profit is actually down by nearly 30% compared to the previous year.  Though the stock price is off its lows when the SEC investigation was announced, it can be seen that this has not been a great year for investors in Cognos stock, who would have been much better off with an index tracker.

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In case you are wondering, Business Objects share price has not exactly been lighting up the night sky either.  They have annual sales growth of 12% but profits have shrunk 46% year on year:

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I am sticking to my theory that all the pure-play BI vendors will continue to face a difficult environment for the foreseeable future.