iRobot Violates the First Law
Shareholders in robot maker iRobot (NAS: IRBT) felt the cold metal slap of reduced guidance today, as company executives issued numbers well below expectations. Full-year 2012 guidance of $465 million to $485 million in revenue clocks in a notch higher than 2011's $465.5 million, but EPS estimates of 85 cents per share are well below both the current year's $1.44 per share and 2012 estimates of $1.45. The company even expects to post a loss in the upcoming quarter, something that hasn't happened in several years.
Cue the short-circuiting comments. (Danger, Will Robinson!) While today's drop might look like a good opportunity to buy in, iRobot might not be much of a growth engine in 2012.
Both quarterly and full-year results trounced their sequential predecessors, and most (but not all) other numbers showed positive increases:
|Annual Revenue||$465.5 million||$401.0 million|
|Q4 Revenue||$130.8 million||$114.0 million|
|Annual Net Income||$40.2 million||$25.5 million|
|Q4 Net Income||$10.6 million||$7.0 million|
|Annual R&D Spending||$36.5 million||$24.8 million|
|Home Robots Shipped||207,000||189,000|
|Gov / Industrial Robots Shipped||773||871|
Source: iRobot press release.
The drop in big-ticket government and industrial sales is a major worry. Not only did fewer robots clank into action on the battlefield this year, but the backlog for those 'bots dropped precipitously. iRobot rumbled into 2011 with $23.9 million in the backlog, but 2012 begins with less than a third of that figure. Stronger demand for home-based 'bots offset that last year, but the company doesn't seem confident that the Roomba can carry it to new heights in the coming months.
Although iRobot did beat estimates this quarter, it's a growth stock only so long as it keeps, well, growing. Losing out on lucrative military contracts hurts, but it might be the kick in the pants the company needs to more aggressively grow its consumer-focused business. Given the reduced guidance, I'm not so sure today's big drop represents a buying opportunity -- but a company this innovative could surprise everyone with new technology. It's certainly worth keeping your eye on.
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