The Rise of the Robots

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"If I wanted perfection, I would have hired a robot. Or a Swede."
-- Otto Mannkusser, Malcolm in the Middle

It takes a robot to swim against the stream of bad news these days. iRobot (Nasdaq: IRBT) just raised its guidance; meanwhile, everybody else is cutting their outlooks.

The maker of military and household helper robots reported earnings of $0.15 per share on sales of $92.4 million, up from a $0.06 per-share loss on $63.8 million in revenue last year.

That said, iRobot really is doing all right. The home robot segment grew sales by 56% over last year, and more than doubled in foreign markets. Given the economic uncertainty, CEO Colin Angle is cautious about the consumer market for vacuum bots, gutter sweepers, and "virtual visiting" helpers -- but he's got "100% visibility" in the government order flow a year ahead, and management feels comfortable raising its 2008 revenue guidance. The new estimate ranges from $310 million to $315 million, well above analyst expectations.

For me, iRobot's attraction is twofold:

• The company's business moat on the consumer side of things is absolutely massive. Quick, name an automated vacuum cleaner not named Roomba! Not so easy, is it, Electrolux (OTC BB: ELUXY)?
• When a small-cap specialist wins military contracts in competition with multinational giants like Raytheon (NYSE: RTN), General Dynamics (NYSE: GD), and Lockheed Martin (NYSE: LMT), it speaks volumes about the company's technology. Uncle Sam wants only the best for its military. This quarter, iRobot renewed another $200 million Army contract for five years.

We're still far away from living like the Jetsons, but getting closer every year. And iRobot looks poised to play a primary position in that plot. Peace out!

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• iRobot: All Gas, No Brakes
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