ITEM: Bigger proves better for Stratasys
From Minneapolis/St.Paul City Business
amcity.com
Tim Huber Staff Reporter
Stratasys Inc. has discovered something interesting about some of its customers: Auto and aerospace firms would rather buy larger -- and far pricier -- rapid prototype makers than smaller, less expensive units.
The Eden Prairie-based company, which makes equipment that essentially prints three-dimensional objects designed on computers, introduced the Quantum, a $325,000 unit, at the end of the first quarter of 1998 and discovered that volume was higher for the high-end equipment.
"They were expecting the low-end marketplace to be where the volume was," said John Vareka, an analyst with Minneapolis-based John G. Kinnard & Co. Instead, auto and aerospace industry companies prefer larger units capable of producing objects up to 20 inches long and 20 inches wide. "There's more of a market for a single unit at $325,000 than there is for the smaller units for $99,000," Vareka said. "I think that they're going to be very successful with this new product in the marketplace."
Quantum shipments exceeded Stratasys' plans for the first quarter and helped the company to reach record revenue of $7 million for the period, up 35 percent from the $5.2 million in revenue Stratasys recorded in first-quarter 1997. Historically, the first quarter is the slowest sales period for Stratasys.
For the year, Vareka is looking for Stratasys to earn 44 cents a share on $38 million in revenue. Next year, he expects Stratasys to rake in $49 million in revenue and earn 61 cents a share.
Of course, the company typically has enjoyed its strongest sales period in the final quarter of the year and that proved not to be the case in 1997, which contributed to the company's lackluster stock price. Stratasys had been in the upper $20s about a year ago, but only recently has broken back into the $11 range after sliding below that level. Revenues actually declined year-over-year in fourth-quarter 1997 to $10.1 million, from $10.4 million.
Still, as Vareka noted, Stratasys is profitable and had a good year in 1997: Overall revenue increased 29 percent last year and earnings totaled 9 cents a share, or $514,833.
"They've always had a good business, it's been profitable, they're gaining market share, they have no debt, they're a fine business," he said. "The problem has been they grew less than they expected to grow." |
