Cognizant injects new life into itself with Zenith acquisition
As I wrote here recently, Cognizant's story is a tragic one. A pioneer of digital solutions not so long ago that became an eventual victim of a money grab via an investment firm who wanted less money spent on strategic acquisitions and revenue growth, and more on squeezing profits in order to boost its stock.
The investment firm Elliot Management cashed out, richer by a cool $1.3 billion, but it left Cognizant badly mauled at the end of it all. In May this year, Cognizant sent seismic shocks all around the IT community when it revised its revenue growth target from the 7-9% band announced in February, to an all-time company low of 3.9-4.9%.
Now, new CEO Brian Humphries is trying to right the ship by making its second Irish acquisition in just three months by snapping up Cork-based Zenith Technologies, a life sciences manufacturing tech company with revenue of around $65 million in 2018.
Zenith Technologies focuses on "implementing digital technologies that manage, control, and optimise drug and medical device production."
See: IT leader Cognizant evolves AI beyond 'hill climbing'
The Hindu newspaper reports that the Cognizant-Zenith combo will allow it to deliver a range of healthcare solutions that straddle both the Internet of Things (IoT) and healthcare realm -- "from factory design consultation, machine sensor and controller instrumentation, supervisory control, and data acquisition, to manufacturing execution systems, batch automation, enterprise resource planning integration, and managed services".
Humphries underscored the Cognizant win in the Times of India by saying the purchase allowed it to "expand Cognizant's IoT portfolio and extend our life sciences domain expertise by becoming a single-source provider of end-to-end smart factory capabilities".
For Cognizant, this couldn't have come at a better time.
According to Business Insider, Cognizant's healthcare revenue was a trifling 4% largely because at least two-thirds of the company's historically low revenue forecast was due to industry consolidation amongst four of its healthcare clients. Zenith works with nine of the world's 10 largest biopharmaceutical manufacturers, giving the combined entity a bigger sprawl and therefore lower revenue risk profile within the vertical.
If there's anything that can inject some new purpose into Cognizant, this acquisition, which gives the company a larger client base and a potential for new cutting edge product offerings, could very well be it.
PREVIOUS AND RELATED COVERAGE:
How Cognizant's digital evolution was derailed by an activist investment firm
By constricting Cognizant's growth-first strategy during a time of re-invention and acquisitions, critics say that activist firm Elliot Management undermined the firm's pioneering efforts in the digital space in order to make some quick cash.
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