Contract Loss Rattles iRobot
Stock quotes in this article:
IRBT
Shares of robotics specialist iRobot(IRBT Quote) plunged Monday after the company lost a lucrative defense contract to supply more than 3,000 robots to a privately owned competitor.
The five-year contract won by Robotic FX -- estimated at around $280 million -- required an initial delivery of 101 robotic systems and 10 spare parts kits going up to 3,000 systems and 1,000 sets of spare parts over the term of the contract. iRobot was regarded as a front-runner in the deal, and investors clearly saw the decision as a crushing blow. The company is widely regarded as the leading supplier of military robots and it has shipped more than 1,000 PackBots, its reconnaissance and bomb-disposal robot. "The loss of the contract to a startup suggests neither IP nor economies of scale are barriers to entry, and iRobot's sales and marketing execution may be flawed," wrote JPMorgan analyst Paul Coster on Monday. JPMorgan makes a market in iRobot shares. Shares of iRobot were down nearly 23% to $18.20 in recent trading. However, the selloff may be the result of a speculative shakeout instead of any change in the company's fundamentals. While the loss of this deal could affect the competitive landscape for iRobot, it's unlikely to change its financial guidance or affect its innovative edge. iRobot did not respond to requests for a comment.- Loading Comments...
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