Stratasys: Can it revamp amid 3D printing fallout?
Stratasys writes down $910 million in the third quarter and outlines plans to retool for the future.
Stratasys reported a third quarter net loss of $938 million due to a write-down of acquisitions such as Makerbot, issued an outlook that fell short of expectations and customers are hesitating to buy 3D printing systems.
That news, delivered Wednesday with Stratasys’ third quarter earnings, wasn’t totally unexpected. Stratasys had already warned the third quarter would be lower than expected.
Here’s the big question? Can Stratasys turn it around?
The company reported a net loss of $938 million, or $18.06 a share, on revenue of $167.6 million, which was down from $203.6 million for the third quarter a year ago. Non-GAAP earnings were a penny a share.
Stratasys sold 5,467 3D printing and additive manufacturing systems.
The company’s big net loss was due to a write down of $910 million largely due to its Makerbot unit as well as the value of its assets amid “increased uncertainty in the 3D printing environment.”
For the fourth quarter, Stratasys projected revenue of $160 million to $175 million with a non-GAAP loss of 17 cents a share to 6 cents a share.
Stratasys said that it is reviewing its long-term operating model. CEO David Reis on a conference call with analysts outlined the company’s turnaround plan. Reis maintained that the 3D market has matured, but has a lot of growth ahead. The issue is that customers have a lot of offerings to ponder and sales cycles are growing.
When asked by an analyst whether HP’s entry into the market was a factor, Reis noted that he didn’t see anything that would indicate that customers were waiting for its much larger rival.
“We’re not seeing ASP pressure and no change the competitive landscape,” said Reis.
Reis outlined plans to streamline operations for the future and emphasized that there was real growth ahead in rapid prototyping.
Overall, Reis’ plan looked solid. What’s unclear is whether demand will hold up to give Stratasys a few solid quarters that meet diminished expectations. It’s also a bit of a stretch to think that some customers aren’t holding back to evaluate alternatives from HP. With enterprise 3D systems running about $1 million a pop, customers aren’t going to rush into a decision—especially if there are vendors ready to kill profit margins to land a deal.