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Investors dump iRobot shares after fourth quarter release

by Amelia Kaufman
Feb 07, 2013


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Amelia Kaufman/MEDILL

Adjusted earnings for iRobot Corp. over the past year.

Investors dumped shares of iRobot Corp. Thursday after the maker of Roomba robots and military drones reported fourth-quarter earnings that reflected the negative impact of sharply lower military orders.

In the quarter ended Dec. 29, iRobot lost $8.9 million, or 21 cents per diluted share, a swing from net income of $10.6 million, or 38 cents per diluted share, in the year ago period. Revenue sagged 23 percent to $100.7 million from $130.8 million.

The company’s loss was not as deep as the 32-cent-a-share deficit that analysts surveyed by Bloomberg were expecting. But Wall Street didn’t like the numbers: In Nasdaq trading, iRobot shares fell $3.20, or 13 percent, to close at $20.62. At that price, the stock has lost 35 percent over the past twelve months.

The Bedford, Mass. company, founded by Massachusetts Institute of Technology (MIT) robotics experts in 1990, was severely hurt in the latest quarter by contract losses in its government and security business. IRobot executives said they are looking to invest more in robots for the home while exploring the medical capabilities of its robots.

In a press release Wednesday, iRobot CEO, Colin Angle, said: “Our home robot business had a phenomenal year with revenue increasing 28 percent over 2011, but as expected, the decline in defense and security revenue resulted in lower total company revenue and profit for the year.”

Revenue for the defense and security group fell a painful 70 percent, to $17.8 million from $56.3 million in the year-ago quarter.

For the full twelve months, revenue in this area has fallen 57.5 percent.

“Our defense and security business was impacted by troop withdrawals in Afghanistan, a continuing resolution and uncertainty around sequestration,” Angle said.

Analysts have voiced concern about domestic and international growth in the home robotic sector. Analyst Adam Fleck stated in a Morningstar note Thursday that the sector's growth has slowed to a rate of about 6 percent compared with 23 percent in the prior quarter.

Analyst Paul Coster of J.P. Morgan said that home robot growth for 2013 will hinge on the international market - specifically "on channel expansion in China and Latin America and deeper penetration in Europe.”

Angle said that the company’s “business performance over the next few years will be driven by our rapidly growing home technology business.

iRobot's full-year earnings declined almost 60 percent to $17.3 million, or 61 cents per diluted share from $40.1 million, or $1.44 per share in 2011. Full-year revenue declined 6.1 percent to $436.2 million from $465.6 million.