Electronic structures of Zn$_{1-x}$Co$_x$O have been investigated using photoemission spectroscopy (PES) and x-ray absorption spectroscopy (XAS). The Co 3d states are found to lie near the top of the O $2p$ valence band, with a peak around $sim 3$ eV binding energy. The Co $2p$ XAS spectrum provides evidence that the Co ions in Zn$_{1-x}$Co$_{x}$O are in the divalent Co$^{2+}$ ($d^7$) states under the tetrahedral symmetry. Our finding indicates that the properly substituted Co ions for Zn sites will not produce the diluted ferromagnetic semiconductor property.