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iRobot Looks to Gather Steam

The company revamps its popular robotic vacuum.

SAN FRANCISCO --

iRobot

(IRBT) - Get Free Report

hopes to hit its groove with a slew of new products for the holiday season.

The company said Wednesday it has updated its popular home vacuum cleaning robot, Roomba, and is also readying to introduce two new devices from its home robots division next month. The company unveiled a swimming pool-cleaning robot earlier this year.

The products should help iRobot accelerate growth in its home robots division and, along with the company's burgeoning military business, could make this a blockbuster year. iRobot is competing for a lucrative contract from the U.S. military for lightweight robots.

"The next generation Roomba and strength in military robot sales bode well for growth in the second half of 2007," wrote James Ricchiuti, an analyst with Needham in a recent report. Needham has an investment banking relationship with the company.

"We believe the stock could move higher over the next several months in anticipation of a strong second half," says Ricchiuti.

Shares of iRobot were down 13 cents to $21.64 Wednesday, but the company's stock is up 21% this year.

iRobot started off slow this year as research and development costs ate into the company's earnings. The company has also been facing a slowdown in its home robots revenue as it tried to flush its channels of older Roomba models in preparation for the introduction of newer products.

The revamped product portfolio and the introduction of new devices at higher prices has already raised the average selling price for home robots and could help accelerate revenue growth in the company's consumer products division.

Revenue from the home robot division grew 3% at the end of the second quarter to $17.2 million from $16.7 million the year before. Home robots accounted for about 60% of the company's revenue in 2006.

During its second-quarter earnings last month, iRobot

raised its revenue expectations for the year to the range of $233 million to $243 million, up from the range of $225 million to $235 million. Analysts polled by Thomson Financial were forecasting revenue of $228.2 million for the year.

iRobot's military business also is looking stronger. Last week, the Defense Department placed an urgent request for 1,000 lightweight robots to help detect explosives. Analysts believe iRobot, which has supplied its PackBot series of explosive detection robots to the military, could be a strong contender for the contract.

The Burlington, Mass.-based company is also developing a line of Small Unmanned Ground Vehicles in partnership with

Boeing

(BA) - Get Free Report

. iRobot and Boeing hope to deliver the first of the SUGVs early next year.