> Just a few years ago, iRobot, best known as the maker of the Roomba, was riding high, with annual revenue topping $1 billion; Amazon bid $1.7 billion to add it to the e-commerce giant’s home technology business. But that deal fell through, and now the Bedford, Massachusetts-based company has reported plunging revenue and steep losses, and recently warned investors of “substantial doubt” about its “ability to continue as a going concern.” With its share price down drastically, it’s now worth about $100 billion. How did the creator of the iconic round robot vacuum—which has sold more than 50 million units—get into this mess?
I cannot comprehend these valuations, US$1 billion is a lot of revenue but just because it's an appliance with a bit of technology/software in the products it pushes to P/E > 100, and a P/E of 100 is seen as a "low"? For an appliances company?
The financial markets are extremely broken, anything that peddles being "tech of <placeholder>" becomes an absurdity. A P/E of 30-40 for an appliances maker would be very, very good.
I -think- the $100 billion is a typo. I -think- it's suppose to be ~$100 million.
Anyhow, I don't think its wrong to say (as the article does) that iRobot failed to focus on its core market, but it's also really unfair to iRobot to say should not have attempted to compete in the new product categories (...you just need to look at the product websites for the competitors cited in the article to see that iRobot isn't alone in trying).
Fundamentally, iRobot is competing in a commodity market. That's what home automation/electronics will be. I think you hit it right on the head - this is just another form of appliance.
I cannot comprehend these valuations, US$1 billion is a lot of revenue but just because it's an appliance with a bit of technology/software in the products it pushes to P/E > 100, and a P/E of 100 is seen as a "low"? For an appliances company?
The financial markets are extremely broken, anything that peddles being "tech of <placeholder>" becomes an absurdity. A P/E of 30-40 for an appliances maker would be very, very good.