The response from some financial analysts has been lukewarm about the amount of money Cognos shelled out for Applix, whose sales represent a meager 6% of Cognos’s revenue.
BMO Capital Markets downgraded Cognos from outperform to market perform saying that the five-times-revenue sticker price causes us to pause and reflect on the risks of integration and productivity.
Meanwhile, Blackmont Capital called it an expensive acquisition for what appears to be an upgrade to its existing PowerPlay and analytics offerings.
Scotia Capital was cautious over the deal pointing to Cognos’s poor track record in fully integrating past acquisitions including Adaytum and Frango. We would become more constructive on Cognos’s stock if the firm articulates a far more aggressive integration plan backed up by early customer wins, demonstrating that it will be able to leverage TM1 globally, the company said in an investor note.
But yesterday Mahoney told Computer Business Review: I think a year or two down the road this will look like a very, very good deal for Cognos. It may even look pretty cheap for Cognos. Even if Cognos does so-so [on integration] it will still look OK; if they do well it will look incredibly cheap. Cognos realized it was paying a lot but everything they heard from customers and partners reassured them that they are getting good value.
He said it is too early to know exactly how Cognos will integrate Applix’s TM1 in-memory OLAP and business analytics capability into the Cognos 8 platform, but he said conceptually it makes sense for TM1 to be a component that can be used on top of the Cognos platform, providing fast data-analysis capabilities with a relatively easy-to-use interface.
Ottawa, Canada-based Cognos gets its hands on Applix’s flagship TM1 product, an in-memory multidimensional (OLAP) server that is well suited for the rigors of complex financial analytics that is a favorite among finance departments because of its Excel-based interface.
Cognos CEO Rob Ashe called the acquisition a terrific strategic fit for Cognos saying it will give the company a new in-memory, read-write OLAP analytics architecture capability for its other CPM products Cognos Planning and Cognos Controller.
Ashe said he now regards financial performance management as a fundamental and foundational part of Cognos’s product strategy and said the decision to buy rather than build the type of software that Applix provides was driven by 15 years of tried and tested technology.
Founded in 1983, Applix grew its revenue 45% to $61.2m in the last 12 months and has amassed over 3,000 customers.
