iRobot to Announce Earnings Oct. 21; What I Expect

iRobot announced that it will hold its 3rd Quarter Conference Call tat 8:30 a.m. Oct. 22. The earnings release will go out after markets close on Oct. 21.

What I'm expecting: Lots of questions from analysts about just how dismal the Christmas retail season is looking, and any "color" on potential SUGV orders. My guess is we won't hear a whole lot on either front, and we'll get middling-to-poor retail results from the quarter, partially offset by slightly better-than-expected military orders. Everything I've seen points to consumer retail weakness except for must-have items like the iPhone. And a Roomba is not a must-have item (or if it is, most people don't see it that way yet). There also will almost certainly be a question about the importance of President Obama's decision on Afghanistan to the company, given that the demand for iRobot's products in that mountainous zone appears high (and iRobot's products are more maneuverable than competitors). My guess is the company will say that Afghanistan obviously has some implications for the company, but argue that even if the war in Afghanistan ended tomorrow, the military is committed to eventually upgrading ALL of its combat teams with robots, and with the SUGV in particular!
Someone also might ask about CEO Colin Angle's recent comment where he mused about leaving the company, and his focus on creating robots for older people in an effort, apparently, not to get bored. Given that Angle is the last true ideas guy at the company with Helen Greiner and Rodney Brooks off creating new companies, I'm a bit worried that iRobot doesn't appear to have much of a pipeline beyond continuously upgrading Roomba, Scooba and PackBot lines. Looj is a flop, although perhaps generation three, four or five of that product could hit the mark. The Verro pool robot isn't even an iRobot product but is a rebadged Aquabot. The long-awaited iRobot lawnmower is nowhere to be seen or even buzzed about, the ConnectR was killed in the crib, etc. Cool stuff that people want -- a robot lawnmower for $500, or a shower/tub/toilet cleaner, don't seem in the cards anytime soon. Some of this makes sense -- you just don't bring revolutionary new gadgets to market during a recession when people are scraping money together for groceries. But still, it would be nice to think the company was preparing products for next year or the year after that might have some mass appeal.
One potential positive of course if Angle really is getting bored, is that bored owners tend to think about selling their company and enjoying a multimillion retirement (or a new challenge entirely). I get the sense that Angle wouldn't mind being back in the lab, creating a new Mars rover. And I'm sure the other day he'd rather have watched NASA bomb the moon than to be reading over staff reports on the latest widget orders for PackBot parts, or whether they should stock up on nickel before the economy rebounds.

I do expect the company to reaffirm once again that it expects to scrape up a profit for the full year with essentially flat revenue just shy of $300 million. My sense is the company's footholds in Europe are continuing to do well but are no longer expanding at the blockbuster pace set earlier this year. One bright spot for the company appears to be its relationship with the Home Shopping Network, which I presume must be their top-selling partner. HSN consistently has access to iRobot's newest products and special package deals that are priced well below iRobot's own direct sales operation. iRobot's direct sales -- which drove higher margins two years ago -- appear to be flat IMHO because the company no longer appears willing to have discounts large enough to undercut its network of retailers.

Hear is what I wrote about the third quarter conference call last year, which seems prescient:

They refused to talk really about 2009 guidance really at all, with caveats about a new administration, economy, et al. Paul Coster didn't like that. Asked about future products, Colin says of course they are developing them but he has nothing to announce and made a cryptic comment about making sure they are right-sized and can deliver profitability. I read that as retrenching for now rather than coming out with a lot of new products next year, which may be one reason why Helen and Rodney are gone -- if the focus is on execution on existing widgets instead of creating lots of new widgets, the brainiacs are likely to get bored.

Tags: iRobot, robot