3D Systems has cut down its revenue targets after facing slow growth and customer demand in the market. Some of the factors that affected it include uncertain commodity costs, industrial customers and currency fluctuation. One more thing that might have hurt its revenue outlook is the probability of Hewlett-Packard Company (NYSE:HPQ) entering into 3D printing market soon.
Series of Events:
There was confusion all around about 3D Systems’ revenue outlook. On Friday, the company announced that its first quarter revenue would fall between $158 million and $160 million. It also expected a non-GAAP loss of 2-4 cents per share. This estimate was way below the Wall Street’s expectations that had come up with revenue of $183.5 million and profit of 17 cents per share. The thing that created buzz among analysts was not the below expectation financial performance of the company, but the explanation that it gave for the same.
Initially, the company came up with an explanation saying its revenue got plunged by about $12 million due to currency fluctuation. It also added that it couldn’t procure nylon and metal applications to sell enough printers. It went on saying that all the automotive, aerospace and healthcare customers decided not to buy new printers less availability of materials and lower oil prices.
The senior management of the company was disappointed by this performance. According to Avi Reichental, Chief Executive Officer, 3D Systems, the sudden falloff in demand led to this sort of performance during the most recent quarter. Even though the company sell a lot of consumer units, software and services, but they were no enough to offset the overall shortfall in industrial demand.
There are many analysts who consider it due to HP effect on the industry. The company plans to enter 3D business next year and promises to offer cheaper services. It’s great to see as how 3D Systems manages to get things back on track in the coming quarter.
