Investors Throw Away Their Shares in iRobot like a Dogeared Paperback by Isaac Asimov (IRBT)

iRobot (NASDAQ:IRBT) took a Will Smith-sized beating reminiscent of the nearly-same-titled 2004 film that saw him thrashing robots gone mad in numbers not that much greater than today’s trading volume. That is clearly an overstatement as 1.78 million shares of iRobot changed hands today, up from a three-month average of just over a 250,000. The carnage, however, was quite similar.

iRobot dropped $4.32 to $18.32, a loss of over 19% on the day. The drop was almost immediate following the company’s release of its 4Q numbers. The stock had closed yesterday at $22.46, but was only able to manage an opening price of $19.46. Prior to 10 AM, the stock had fallen to a 52-week low, and the lowest point it would see on the day at $17.77. Mercifully, iRobot was able to pick up a bit of this loss over the remainder of the day on heavy trading.

Today’s losses came on the heels of iRobot’s 4Q guidance reports. iRobot’s third-quarter results easily topped the estimated EPS of $0.54 on revenue of $126.3 million versus the consensus of $0.34 and $120.4 million. The fourth-quarter numbers released today showed a stark contrast to this recent performance. Management now sees a fourth-quarter loss of $0.33 to $0.39 on revenue of $98 million to $102 million, primarily due to recent restructuring, versus the consensus of a $0.20 profit and revenue of $148.8 million.

This aforementioned restructuring is a result of weak sales in its Defense and Security (D&S) segment. Thankfully, sales in iRobot’s home segment remain seemingly quite strong.

“During the third-quarter we made several strategic decisions to strengthen the company. We announced our acquisition of Evolution Robotics (ER), hired key senior leaders and began to implement significant actions in our D&S business. Our Home Robot unit has had an outstanding year and we expect continued growth in that business. The 2012 outlook for D&S has deteriorated and we expect further declines in 2013. To right-size the business we have restructured D&S and taken costs out. These moves will result in a fourth quarter 2012 restructuring charge of $4-5 million,” shared Colin Angle, chairman and CEO of iRobot.

“We are taking these actions in order to invest in our high growth Home Robot business as well as our emerging high potential remote presence business, while meeting our commitment to profitable growth,” continued Mr. Angle.

A large portion of this restructuring involves the hiring of Frank Wilson, Senior Vice President and General Manager of D&S, Youssef Saleh, Vice President of Remote Presence, and Paolo Pirjanian, formerly the CEO of Evolution Robotics, as CTO. It is iRobot’s hope that these personnel changes will allow the first quarter of 2013, which begins on December 30, to return to levels the company enjoyed earlier in the year.

With the holidays approaching, it is within the realm of possibilities that Christmas sales will see an increase in a number of home segment items, including iRobot’s indoor and outdoor cleaning machines.

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Published by Brendan Byrne

While studying economics, Brendan found himself comfortably falling down the rabbit hole of restaurant work, ultimately opening a consulting business and working as a private wine buyer. On a whim, he moved to China, and in his first week following a triumphant pub quiz victory, he found himself bleeding on the floor based on his arrogance. The same man who put him there offered him a job lecturing for the University of Wales in various sister universities throughout the Middle Kingdom. While primarily lecturing in descriptive and comparative statistics, Brendan simultaneously earned an Msc in Banking and International Finance from the University of Wales-Bangor. He's presently doing something he hates, respecting French people. Well, two, his wife and her mother in the lovely town of Antigua, Guatemala. You may contact Brendan via his email (brendanbyrne@wallstreetpr.com) or his Google+ page (https://plus.google.com/u/0/116608759701551457422).

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