Did you forget about iRobot's Droid Factory?

From TheStockMasters

Today marks a new 52-week low for iRobot Corporation (IRBT) after the stock made a comeback late last year, it just hasn’t been able to keep the momentum. Tuesday after reporting a Q4 loss and providing a 2007 guidance that was below Wall Street expectations, shares fell 12%. iRobot has sold more than 2 million iRobot Roomba vacuuming robots and over 800 PackBot tactical mobile robots. They credit their Packbot as having performed thousands of missions and saving scores of soldiers’ lives. Despite the amazing technology and commercial success of selling robots to the public, investors aren’t feeling the love.

Besides hitting a new 52-week low, iRobot’s revenue from their robotic vacuum and mop (the Roomba and Scooba) increased 22% to $41.8M from $34M the year before. Last month iRobot was awarded a $16.6M order for delivery of more than 100 explosive-detection robots for use by the U.S. military in Iraq. They’ve got some new products in the pipeline including the iRobot Create, a programmable robot designed for aspiring roboticists, high-school and college students, and robot developers. You got to play with legos and actions figures as a kid, today’s kids get programmable robots. iRobot’s CEO Colin Angle talked to the TheStreet.com this week and their article is a great read for those interested in the CEO’s reaction to the drop in share price and things to come. Angle told TheStreet.com:
This is a long-term story. We have exciting news pointing to the second half of 2007 when we plan to have new products from the home robots division. And we have guided 28% to 30% growth in the second half of the year.

That quote alone reinforces what I want to drive home to my fellow Stockmasters, this company and stock is a long-term story. What better entrance point then in the coming weeks when the stock has to start its build up all over again. Another perspective that Wall Street needs to consider is iRobot’s intellectual property – all their wonderful patents, brilliant inventions, and technology. Sure they haven’t built R2-D2 or C-3PO but they have basically created their own Droid Factory that is generating revenue and constantly evolving new and better technologies.

What’s not to like is that IRBT’s P/E is way too high and closing the year with negative net revenue is never encouraging. But they’re revenue is growing, in 2005 they made $141M, in 2006 $181M, and last quarter they raked in $61M. Give it 10 years and iRobot will be the company that sells the first R2 unit or T-1000. I understand you hate the stock right now, but just consider all that intellectual property they are sitting on. According to their annual 10-K filed last march as of December 31, 2005 they have 24 U.S. patents and more than 25 pending U.S. patent applications. They have six foreign patents and more than 20 pending foreign patent applications. Granted there are not a ton of companies that want to break into the self-vacuum robot market, but it’s the big picture I want you to think about.

Is it possible that we will create robots with Artificial Intelligence and they will challenge our existence such as in The Matrix (1999) or I, Robot (2004)? Let’s no go that far, but for those of you with the Roomba bumping into your leg right now it makes you think. Before we enter into a subject that is more or less ridiculous and not going to make us any money, let’s think long-term investing. The robot makers are hurting right now, why not seize the opportunity and get in while shares of IRBT are down? Besides, robots of the future will be nice and nerdy, think C-3PO, not the T-1000 that kills on contact. Just imagine yourself in 20 years getting annoyed with your pesky robot that is fluent in over six million forms of communication but thankful you investing back in 2007 when iRobot was at a 52-week low.
C-3PO: Listen to them, they’re dying, R2. Curse my metal body. I wasn’t fast enough. It’s all my fault. My poor master.
Share holders of IRBT may feel like dying, but just think of the years to come.

Article written by: Frank Lara Jr.
Article posted on: February 15th, 2007

Disclaimer: The Author does not own any shares or hold any short/long positions in IRBT.

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