I was going to write about the conflict between translators and agencies, but after I took a little heat from the readers because of the recent posts, I’d better keep my head low and let things cool down 🙂 About a year and half ago, I talked about a serious downtrend in Lionbridge stock and suggested this was sort of a “thermometer” for our industry. Stock price reflects the perceived value of a company and expectations of its future earnings. When the price goes up, this means investors believe the future is bright, and vice versa. Since Lionbridge (Nasdaq: LIOX) is such a big player in our market, I think it’s safe to assume its stock performance has a certain degree of correlation with our industry in general. Let’s see how the company’s stock has been performing recently.
Lionbridge Stock Soars
Since September 2011, LIOX went from about $2.5 to about $4, growing by approx. 50%. For example, for Mr. Rory Cowan, CEO, Lionbridge, who owns 4,630,999 of shares according to Yahoo! Finance this meant his investment in LIOX went from $11.5 million to $18.5 million in value. Not bad, huh? Yes, unless you compare it with $30, the price of Lionbridge before the dot-com bubble burst in March 2001. At that point, Mr. Cowan’s investment would’ve been worth $139 million.
What’s driving Lionbridge stock price? It’s obviously the company’s earnings. According to the last quarter report, in the first nine months of 2012, LIOX saw a revenue increase of $22.9 million or 7% compared to the same period in 2011. Moreover, the company announced that an estimated revenue growth for 2013 is 6-10%. Another good sign is that recently, Lionbridge authorized a share repurchase program allowing to buy up to $18 million of the company’s stock. Both the earnings and the buyback are very positive, bullish signals.
What Do You Make of It?
Now, what does it mean for the rest of the players across the market for translation services? This uptrend seems to strongly contradict the doom and gloom of predictions that automated translation will soon replace human translators and rates will continue to race to the bottom. In particular, this appears to be somewhat inconsistent with the recent findings of Common Sense Advisory. In November 2012, CSA reported that translation rates nose-dived since 2008. Either this is not true for Lionbridge, or the company might be very successful in offsetting the supposedly dropping rates by
paying less to translators growing volume.
At any rate, what’s happening at Lionbridge may be a reassurance about the future of our industry, at least for the next few years. Things might not be as bad as they appear to be based on the predictions about MT and dropping rates. During the same period when these tendencies were supposedly tearing our industry apart, Lionbridge’s stock showed a sweet 50% increase. If you short-sold LIOX when you heard of machine translation successes and “the end of translation as we knew it,” I do hope that you set a stop loss order and got stopped out before sustaining a huge loss.