Robot maker iRobot (NASDAQ:IRBT) has had a full dance card the last few months, meeting and greeting everyone from stun-gun maker TASER (NASDAQ:TASR) to fighter-jet builder Lockheed Martin (NYSE:LMT). That's a heck of a leap from humble vacuum cleaners.

What analysts say:

  • Buy, sell, or waffle? Only seven analysts still follow iRobot, down one from last quarter. The company retains four of its buy ratings and three holds.
  • Revenue. On average, Wall Street's looking for 20% sales growth, to $41.5 million.
  • Earnings. But per-share losses are expected to balloon to $0.20.

What management says:
As mentioned above, iRobot has been a busy little cyber-beaver this quarter, inking a deal with TASER to begin arming iRobot's PackBots with stun guns; joining Lockheed, Boeing (NYSE:BA), and SAIC (NYSE:SAI) to develop handheld controllers for guiding unmanned aerial and ground vehicles; and partnering with Boeing for the unlikely purpose (considering the partner) of building a new unmanned ground vehicle.

What management does:
Now, if only iRobot can translate all of this new business into profits. While gross margins appear to be rising, operating margins have been sliding for three straight quarters, and net margins have dropped for the past two.

Margins

12/05

4/06

7/06

9/06

12/06

3/07

Gross

33.6%

34.2%

35.7%

36.6%

37.2%

36.5%

Operating

1.9%

2.1%

2.6%

2.5%

1.4%

0.1%

Net

1.8%

2.3%

3.0%

3.1%

1.9%

0.5%
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
At first glance, you might think the problem lay with operating costs rising too fast relative to revenue growth. In part, that's true. Over the last six months, sales are up 19%, and selling, general, and administrative costs have risen 21%. With margins already razor-thin, that's not good. But closer inspection reveals that the real damage to operating profitability comes from another source -- increased R&D spending. iRobot spent roughly 10% of its revenues on research over the last two quarters -- a 73% year-over-year increase.

Our hope, of course, is that investments in research today will yield expanded profit margins tomorrow -- both literally and figuratively.

What did we expect out of iRobot last quarter, and what did we see when we popped the access hatch? Find out in:

Fool contributor Rich Smith owns shares of iRobot. iRobot and TASER are Motley Fool Rule Breakers picks. The Fool's disclosure policy has a steely exterior, but a heart of gold.