What's Really Going on With 3D Systems Right Now?

The company has made several big recent announcements, and its stock has responded spastically.

Jan 16, 2014 at 7:01PM

It's safe to say that 3D Systems (NYSE:DDD) has started 2014 off with a bang. In the last week alone, the company revealed its new entry into the 3-D food printing world at CES and enlisted a celebrity as its new creative director. This is all on the heels of a recent acquisition that could be a huge boon for the company's research department. The 3-D printing industry is known for its volatility, but 3D Systems in particular has seen its stock jump up and down recently jumping from $92.80 to $96.18 on Jan. 8, and then back down to $91.58 on Jan. 13. Here's what all this news means for the company.

New toys and creative directors
When was the last time you thought to yourself, "I could really use a 3-D printed sugar sculpture right now?" For pastry chefs, 3D Systems hopes the answer is often. The company took to CES to unveil its ChefJet series of 3-D printers, calling it an "entirely new, kitchen-ready 3D printer category for edibles." Now, people in the culinary industry have the opportunity to create full-color shapes made entirely out of different types of flavored sugars (they even come in watermelon!) without having an advanced degree in 3-D design.

The ChefJet is 3D Systems' first confectionary printer offering since inking its acquisition deal with edible start-up The Sugar Lab in September 2013. The new line of printers will offer a monochrome option that will sell for under $5,000, along with a pro version that prints in full-color for less than $10,000.

The move to start selling printers that manufacture edibles is very much in line with 3D Systems' goal to make useful products available for consumers, not just tech geeks. The company has shelled out money in the past to create a line of 3-D products that can print jewelry, as well as an at-home 3-D printer, the Cube, which allegedly can be used by both adults and children. 3D Systems hopes that by creating more imaginative and affordable options, the masses are soon to follow.

To help further ensnare the attention of the masses, 3D Systems recently made additional headlines by appointing Will.i.am (of pop/hip-hop group The Black-Eyed Peas) to the position of its creative director. The recording artist's duties will be to "inspire, shape, and drive all of 3D Systems' initiatives," as well as encourage collaborations with brand partners, and develop exciting new global marketing campaigns. Hiring a celebrity as creative director may seem like a move purely made for attention, but Will.i.am has the experience for the job -- he previously worked as a brand ambassador for Intel, where he pitched ideas and attended conferences, and wasn't merely a famous face.

Xerox acquisition
Printing sweets and hiring Will.i.am as your creative director might be a good way to make people notice you, but 3D Systems recently made another savvy business move, and did so relatively quietly. On Jan. 2, the business completed its acquisition of the solid ink engineering and development teams at Xerox (NYSE:XRX) for $32.5 million, and added 100 Xerox engineers and contractors to 3D Systems' research and development department.

The move might have seemed a bit random at first, since Xerox appears to have more solid footing in the 2-D printing space. In truth, however, Xerox and 3D Systems have been working together for 15 years, most recently putting out a line of ProJet printers together with positive sales results. So why did 3D Systems wait until now to engage in an acquisition? One reason could be because it had the financial resources to do so, with $345.3 million in cash on record as of its last quarterly report. If the company wants to "extend and cement [its] marketplace leadership position" by offering a 3-D printer to everybody, it's going to need a bigger research team to handle the size of those aspirations, and adding personnel from a collaborator with a long prior history of success is a great way to accomplish that.

Xerox is also researching an innovative type of technology within its Palo Alto Research Center to learn how to print electronic circuitry. While that branch of research wasn't included within the 3D Systems transaction, it's still a wise move for the 3-D printing company to solidify a relationship with a well-known brand whose potential in the 3-D space could eventually be undeniable.

Dimensions of the future
It's clear that much of 3D Systems' resources are currently going into research and expanding its brand presence. Already the largest business within its industry, this company wants to become a household name that offers as many consumer printing options as possible, and it isn't afraid to spend a little to get there. While its share price may fluctuate for the time being, this is an exciting company to follow, and the seeds it currently is planting could grow to become gigantic market shares with a ubiquitous presence in the consumer industry of the future.

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Fool contributor Caroline Bennett has no position in any stocks mentioned. The Motley Fool recommends 3D Systems. The Motley Fool owns shares of 3D Systems and has the following options: short January 2014 $20 puts on 3D Systems. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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