Memo to iRobot's CFO: NOW IS THE TIME TO LOCK IN THOSE NICKEL PRICES. Sorry for shouting.
Doing this should save iRobot about $5 million next year versus this year, and who knows how long nickel will stay this cheap? Better yet, do it NOW and announce the cost savings on your conference call next week.
Tags: nickel
Thursday, October 16, 2008
Lock in those nickel prices!
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8 comments:
there's nothing in that graph that suggests nickel will increase in price anytime soon. global demand is shrinking, we're in a recession.
And batteries are trending towards lithium-based technology.
Lithium is still much more expensive than Nickel, and even moreso now that Nickel prices have collapsed and the auto sector is ramping up hybrid-lithium cars.
iRobot has no need to go to Lithium, as their robots already run for 2 hours on Nickel.
And to anonymous 1, hedging prices long-term when you are in a recession is precisely when to do it. If I was iRobot, I would try to hedge nickel for the next 2-3 years at these prices, and have a stable, cheap price guaranteed. And nickel really doesn't have much more to fall. Nickel mines are already going to start shutting down as the price starts dropping below the cost of production.
I would beg to differ that we should be happy with the nickel batteries. I have a new roomba 560 with the lousy nickel cadmium batteries, and I am only getting 80 minutes use out of it. I was not pleased to open it up and see the nicad technology in there. They need to at least get back to Nimh.
"Only" 80 minutes? Sounds pretty good to me...
Anything over an hour just seems like overkill. You can just schedule it to run more often...
80 minutes may sound like a lot, but it is just enough (and not always) to clean three rooms (not four as advertised). What's worse with nicad is that within a year it will be 60 minutes or less.
I thought Lithium had bigger problems with longevity than Nickel?
Thorn,
Actually, some of the newer lithium technologies don't have this problem. For instance, A123 batteries are being considered by GM for its all electric car specifically because of their incredibly long life (they are also already used commercially in Dewalt drills). Check out this chart for A123 batteries:
http://www.a123systems.com/#/technology/life/lchart1/
They go 3000 cycles before the batteries are down to 90% capacity, which is likely well beyond the life span of any roomba vacuum, and is far, far better than the current roomba battery.
Now, I know you have the investor's perspective, and I'm sure that irobot makes a great deal of money selling replacement batteries. The problem is that what is good for the shareholder is not good for the consumer.
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