Profit Tumbles at Cogent; ID Firm’s Shares Fall 19%

Shares of South Pasadena-based Cogent Inc., which makes fingerprint identification systems, lost nearly one-fifth of their value Thursday after the company reported a second consecutive quarter of disappointing financial results.

Cogent, one of the hottest initial public stock offerings of 2004, plunged $2.63, or 19%, to $11.07, leaving it below the September 2004 IPO price of $12. The stock had soared as high as $35.75 within weeks of the IPO.

Cogent said second-quarter sales were $13.2 million, a 66% drop from a year earlier. Net income tumbled to $3.6 million, or 4 cents a share, from $14.4 million, or 16 cents.

Ming Hsieh, Cogent’s chief executive, said that sales to the company’s two largest customers -- the U.S. Department of Homeland Security and Venezuela’s National Electoral Council -- were down sharply this year. But he said that he expected orders from those entities to improve and that the company was working to “diversify our revenue stream to provide more consistent results.”

Two investment firms took a dim view of Cogent’s near-term prospects: Morgan Stanley, which managed Cogent’s IPO, downgraded the stock to “equal-weight” from “over-weight.” Needham & Co. cut its rating to “underperform” from “hold.”

But brokerage Jefferies & Co. raised its rating to “buy” from “underperform,” saying it believed that Cogent’s second-quarter results “represent the bottom,” and that sales should pick up. Jefferies said Cogent told analysts that delays of sales to Homeland Security “were not due to any technical problems” with the firm’s ID systems, which enable users to quickly compare fingerprints in multiple computer databases.