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Between ExOne's (XONE) stellar IPO and the 2012 gains seen by 3D Systems (DDD) and Stratasys...

Between ExOne's (XONE) stellar IPO and the 2012 gains seen by 3D Systems (DDD) and Stratasys (SSYS), it's clear investors are expecting big things from 3D printers. But low R&D spending could stall the industry's progress, warns Ashlee Vance. Unlike chips or hard drives, there's no guarantee of steady technology advances for printer nozzles and plastic melting. DDD and SSYS respectively spent just 6% and 9% of their 2011 revenue on R&D; Vance is more positive on upstarts such as Shapeways, who are finding ways to significantly cut production and materials costs.
Comments (33)
  • January24
    , contributor
    Comments (115) | Send Message
     
    I wonder why we're reading about revenue spent by DDD and SSYS in TWO THOUSAND ELEVEN. This is 2013. DDD has spent all kinds of money lately acquiring smaller companies, including one that we are certain came with significant technology that folded nicely into the company.

     

    I don't know who Ashley Vance is, but presumably she understands that the three-dimensional printing companies are doing things like manufacturing surgical instruments and jet aircraft parts. Maybe they know just a LITTLE something more about their respective businesses than she does.

     

    Then, there are the companies who are working on how to custom "print" new kidneys and such. There is an 80-year-old man who has a new jaw which was custom "printed" for him. It's working out just fine. One would have to be rather unimaginative to fail to see the possibilities there.

     

    Disclosure: I own small amounts of DDD, SSYS and DASTY. I'm just a small retail investor who can spot the next huge thing slightly in advance.
    9 Feb 2013, 05:23 PM Reply Like
  • RedS10
    , contributor
    Comments (67) | Send Message
     
    I absolutely agree January24... the SA publications lately have been totally unprofessional... unknowledgeable & headline driven.

     

    In 2011 the R & D spending for some stellar corporations were:
    -- IBM 6.01%
    -- Apple 2.76%
    -- HP 2.38%
    And, as you point out, the acquisitions that DDD has made brings development skills, marketing skills & management ability to keep the very best talent across all product platforms & materials.

     

    I'm long DDD, SSYS, ONVO & PRLB... unfortunately I didn't buy DASTY back in early 2012!
    9 Feb 2013, 06:04 PM Reply Like
  • ebeuu
    , contributor
    Comments (338) | Send Message
     
    Agreed; I did not stay in my full position and sold it in increments last week.
    really did not like the price action and didn't want to write covered calls.
    There will be plenty of time to re-enter should this become as the laser printer is.
    I don't like this market, now.
    9 Feb 2013, 07:04 PM Reply Like
  • jpmj4847
    , contributor
    Comments (495) | Send Message
     
    Do your own homework and go with your gut felling sometime....just look at ATVI ....Skylanders and children are all you needed to watch.jpmj4847
    9 Feb 2013, 07:52 PM Reply Like
  • Matt Jonza
    , contributor
    Comments (86) | Send Message
     
    Am I the only one out there who thinks all three of these stocks are going to come crashing down? The P/E's are ridiculous. Everyone seems to believe there will be rapid adoption in the retail market... I just don't buy it
    9 Feb 2013, 08:04 PM Reply Like
  • January24
    , contributor
    Comments (115) | Send Message
     
    There may be others who agree with you, Jonza . . . but I am not one of them. Yes, I DO think that there WILL be fairly rapid adoption in the retail market, but I also think that there are industrial and medical uses for three-dimensional printing that will be world-changing.

     

    Three-D technology will have application in more than one arena . . . just as computers have had. Kids play games on computers. And at the same time, every sort of business -- from the largest to the smallest -- relies on computers to store and communicate information.

     

    Your comment reminds me of how even the great Bill Gates once commented that he couldn't imagine that there would ever come a time when people would use computers at home. He foresaw ONLY business uses for them. If HE couldn't see it, I don't suppose I should expect you to be able to see the broad applications for three-D printing.

     

    Listen: I have just a little bit of DDD, DASTY and SSYS. If they take off, I'm not going to make a fortune, so I'm not "pumping" these stocks. I just think it's fun to be part of what will become a huge industry. And even if the prices fall a little in the short term, I'm not going to sell. Remember, the price of Apple fell several times on its way to becoming a giant company.
    10 Feb 2013, 10:43 AM Reply Like
  • Matt Jonza
    , contributor
    Comments (86) | Send Message
     
    January... I am not denying that 3D printing is a disruptive technology that will benefit humanity greatly over the coming decades. The applications are endless. But from an investing standpoint... I believe you need to take another look.

     

    The current valuations of these stocks are nearing dot-com boom levels. In order to justify the valuations, investors seem to be assuming that there will be rapid adoption at both the corporate and retail level.

     

    I believe the corporate adoption rate will be staggering. The advantages for manufacturers and designers to simply imagine an idea, create a CAD, and in minutes have a prototype in front of them is obvious. Also, the applications for medical devices are seemingly endless. I would love an ankle brace that fits perfectly to my skinny chicken legs. I believe there will be companies and hospitals all over that get at least one of these machines in the very near future.

     

    But the valuations demand more than that... if these companies are ever going to grow enough to support current share prices, there needs to be retail adoption. And that is where you lose me...

     

    Why do I need a 3D printer in my home? Do I want to make my own plastic silverware? Hardly. Maybe I would like a frisbee? Umm Walmart. Perhaps I lost the top to my favorite travel mug? Well this is true, but it is hardly worth the couple hundred dollars a 3D printer will cost in a few years.

     

    When it comes down to it, 3D printers don't make anything with electrons. All of my entertainment, and all of the younger generations would agree, are electronics. To me, I don't see what attraction 3D printers have for individual households. If you can think of something, please fill me in!

     

    So that's why I am waiting for a market correction... sometime within the next year. When it happens, I will look into establishing a long position.
    10 Feb 2013, 07:53 PM Reply Like
  • January24
    , contributor
    Comments (115) | Send Message
     
    Jonza,

     

    Lego sets are really fun for kids, and they're experiencing a new burst of popularity. But have you seen the prices? Oh, my gosh! They're getting prices up to $150 for ONE SET. It's not difficult for me to imagine that parents would want to make their own little blocks that fit together (not Legos) to construct cities and pirate ships and helicopters and cars and . . .

     

    And plastic jewelry for little girls. And houses similar to Barbie houses without the prices. And Barbie-like cars and furniture etc. Mattel (or whoever owns Barbie) would certainly be able to prevent the use of the name Barbie, but they certainly would NOT be able to stop people from making plastic houses and cars and furniture.

     

    You should check out the prices of some of the more elaborate doll houses. They run into the hundreds of dollars -- some of them. Besides, if three-D printing could print an entire FINISHED doll house so Dad didn't have to spend the entire night before Christmas putting the blooming thing together . . . well, he's going to pay a premium for that!

     

    You could be right. The prices of DDD, Stratasys and Dassault may all be cut in half any day. But as I said, I'm just a small retail investor. I'm in it for the fun as much as anything else. I don't golf, so I used some "fun" money to buy a little of each of those three stocks. I don't want the bother of selling them at what you think might be their highs and then have to wait anxiously to see if I can buy them back at a lower price. I'm in; I'm going to watch the fun.

     

    And if they can end up printing me a new kidney while they're at it, so much the better. It looks like I'm going to need one at some point.
    11 Feb 2013, 09:21 AM Reply Like
  • cgm
    , contributor
    Comments (144) | Send Message
     
    I find the technology fascinating, but the stocks ae very overpriced. I feel that it is very likely there will be a shakeout, but it's not clear from what level or when.
    9 Feb 2013, 10:08 PM Reply Like
  • January24
    , contributor
    Comments (115) | Send Message
     
    And that's the point. Perhaps the stocks are overpriced at this point. Perhaps there will be a shakeout. But also, as you say, it's not clear that this will happen . . . or when.

     

    I like the technology. It's fun. It's cool. It's new. It's got undeniable application which is almost universal.

     

    I bought my small amount of DDD, SSYS and DASTY and I'm just going to hold onto them. Even if they dip a bit in the short run, I think they'll return to their current prices and then go up from there at some point. I'm along for the ride.
    11 Feb 2013, 09:25 AM Reply Like
  • paulmichael
    , contributor
    Comments (155) | Send Message
     
    Disclosure: Just bought XONE at IPO (everything's riding on 'er)

     

    When I heard about 3D printing about a year ago on TedTalks I was fascinated. When they said a low-end model costs 300$ and sits on your desktop, I thought "Maybe TedTalks" are a spoof or something... where's all the retailers? Why can't I buy one of these at the corner store?

     

    Sure, there must be resistance in the manufacturing world to this trend, and the media machine with its fingers in those respective pies keeps it mum, but why keep your typewriter when the new 386 just came on the market?

     

    I wanna get in on the ground floor - let the poor workers in Asia be free to do something less menial with their time and talents, eh?
    9 Feb 2013, 11:51 PM Reply Like
  • Raj!
    , contributor
    Comments (19) | Send Message
     
    CIMT a small company from Israel, probably may benefit the most as it makes CAD/CAM software for DDD.
    All these companies are just in the First phase of growth(DDD,SSY DASTY,CIMT,ONVO,PRCP etc...)
    Do not forget the sky high P/E of AMZN and CRM that no one talk about,whereas all these DDD companies have significant potential specially in health care field and ,major tech industries..
    Who is this Ashlee person who is talking about 2011 ??
    In tech industry things change so fast and we are told about 2 year old story???!!!.
    XONE , a fresh IPO is one more addition to this disruptive DDD industry if any one is interested..
    9 Feb 2013, 11:52 PM Reply Like
  • January24
    , contributor
    Comments (115) | Send Message
     
    Raj,

     

    I don't want to disparage Seeking Alpha, but I think that many of the authors of these articles are sort of "legends in their own minds." I too wondered, "Who is Ashley Vance and why should we care what she thinks?"

     

    You know, a lot of these financial sites will publish the articles of anybody who cares to submit one. Even Motley Fool will publish articles by their members. They do distinguish between articles by their own staff and those by their subscribers . . . but STILL.

     

    Perhaps you and I also have what it takes to be "noted authorities" on Seeking Alpha. At least we wouldn't be citing amounts spent on research and development by 3-D companies in 2011.
    10 Feb 2013, 10:50 AM Reply Like
  • George Anast, M.D.
    , contributor
    Comments (282) | Send Message
     
    This article adds little to my understanding of the industry and is, besides, out of date. I suspect the article may be largely "noise."
    9 Feb 2013, 11:55 PM Reply Like
  • corleech@aol.com
    , contributor
    Comments (2) | Send Message
     
    3 d printing is a great tech invention but we must remember that television and the ball point pen couldnt be purchased for decades after their invention.Likewise with oil and gas production, maybe another 5 years if our prez will leave it alone.
    9 Feb 2013, 11:58 PM Reply Like
  • Daniel L. Chen
    , contributor
    Comments (22) | Send Message
     
    3D printing companies' potential to shake up the market are far greater than other overpriced companies with far less potential and far greater valuations (like AMZN, LNKD, NFLX). I do believe these companies are currently overvalued, but not as overvalued as bears make them seem. We're talking about companies that have the potential to truly revolutionize the world in many, many ways, not just in one very narrow way. And if you read the news, you'll notice that 3D companies are constantly pushing out new products and winning awards left and right.
    10 Feb 2013, 01:35 AM Reply Like
  • January24
    , contributor
    Comments (115) | Send Message
     
    Revolutionize the world -- YES. And (just like computers) not just via a few applications but universally. Anyone who can't see this needs to engage his or her imagination -- which is clearly fast asleep.
    10 Feb 2013, 10:53 AM Reply Like
  • RedS10
    , contributor
    Comments (67) | Send Message
     
    I don't know who Ashlee Vance is but if she's recommending Shapeways, if she's more positive on Shapeways over DDD or SSYS, she has some rethinking to do... Shapeways is a "marketplace." What's a "marketplace?" DDD & SSYS are corporations with considerable customer sets of leading automobile, aviation & medical customers. Shapeways is essentially in the trinket & bracelet business.
    10 Feb 2013, 03:33 AM Reply Like
  • RedS10
    , contributor
    Comments (67) | Send Message
     
    I've read the Exone IPO offering. Here are my takeaways:
    -- They have sold 5 machines, for a total of $15M revenue
    -- They have approximately 5X more people in SG&A than R&D
    -- Their R&D spending is 7X lower than their SG&A spending
    -- They have shipped 8 additional machines & not claimed $'s yet
    -- Their "technology" comes from an MIT license @ $100K/yr.
    -- There founder, CEO & Chairman seems to be a great-grandson of the famous Colonel Rockwell of Rockwell International fame. (Or great-great-grandson.)

     

    I have no idea how they figured out the $18 offering price. But having built & shipped a mere 13 machines, less than half of which they have claimed revenue on, is a warning sign. I'll have to go back & look at their WIP to see what the pipeline looks like.

     

    I think additive manufacturing has a great future. XONE: caution, everyone.
    10 Feb 2013, 03:45 AM Reply Like
  • January24
    , contributor
    Comments (115) | Send Message
     
    Agree. People should look at DDD, DASTY and SSYS -- at least based on the industry analysis I've read . . . and on the products from these companies that I've seen.
    10 Feb 2013, 10:55 AM Reply Like
  • paulmichael
    , contributor
    Comments (155) | Send Message
     
    The sales numbers will increase exponentially, not linearly. And once the US military (among others) hears about this, they will get 50 orders overnight. Not to mention the great press from IPO which will ensure expansion of its sales as well... I think the stock may go much further than other 3D companies, probably over 110 within a couple of years.
    11 Feb 2013, 11:13 AM Reply Like
  • rambler1
    , contributor
    Comments (395) | Send Message
     
    Since when was 9% spent on r & d considered light?
    10 Feb 2013, 10:54 AM Reply Like
  • neucarol
    , contributor
    Comments (2) | Send Message
     
    The best part of the article is the mention of Shapeways which leads to Makerbots, Thingiverse...
    Fascinating ways for individuals to design/create/invent and make/print prototypes or onsies/twosies.morsies for sale on Etsy, Shapeways, craft fairs, websites....
    10 Feb 2013, 02:41 PM Reply Like
  • InvestorWisdom
    , contributor
    Comments (270) | Send Message
     
    The difference with XONE, compared to SSYS and DDD is pretty big... While most in this hot new sector are still using ABS plastics and lightly dabbling with other materials, XONE can already make parts out of steel, bronze, silica sand, and glass... and soon customers will be able to use titanium, tungsten, carbide, aluminum, and magnesium.

     

    Having Caterpillar, Ford Motor Co., BWM, Mercedes, Toyota and Boeing as their initial customers base is significant. Any one of these customers could dramatically increase the amount of machines operating in their production lines... and these mass manufacturing names add tons of credibility when it comes to landing future customers... seeds have been planted

     

    People acts like its up too much already, because it has ran quite a bit on a percentile basis... but when you look at the market cap compared to the others and the amount of NEW interest/$$$$ learning about this sector for the first time, its freakin cheap and could easily move MUCH higher near and long term based on sector hype alone... This is just the beginning of this monster growth sector. Theres a tremendous amount of $$$ out there that wont want to miss out on the next big 3D winner.... and $$$ moves the markets.

     

    These types of stocks should not be judged by their CURRENT numbers... Its much wiser to look at their market position and product offering, then compare to the future potential.

     

    In 2010, XONE sold 4 machines

     

    In 2011, XONE sold 4 machines

     

    In the first 9 months of 2012, XONE sold 5 machines

     

    In just the 3 last months of 2012 XONE sold 8 machines...

     

    How much will they sell now that interest is swelling like never before?

     

    From the prospectus...

     

    Machine Unit Shipments and Backlog

     

    During the three month period ended December 31, 2012, we shipped eight machine units to end customers globally. We had no machine unit shipments to end customers during the three months ended December 31, 2011. We believe the significant increase in machine unit shipments for the three month period ended December 31, 2012 is a strong indicator of the increased acceptance of our 3D printing technology in the marketplace and is significant to an investor’s understanding of our business.
    10 Feb 2013, 07:54 PM Reply Like
  • paulmichael
    , contributor
    Comments (155) | Send Message
     
    Don't overlook the likely addition of the US military to this already impressive list of customers who have ExOne machines. Current sales will grow not linearly but exponentially...
    11 Feb 2013, 11:13 AM Reply Like
  • RedS10
    , contributor
    Comments (67) | Send Message
     
    3 D Systems Customer Base... 3D website's corporate investment presentation lists these corporations as among their customer installed base:

     

    3M, Invisalign, Dell, GE, Delphi, Ford, Conformis, Nike, Hendrick, Honeywell, IBM, SC Johnson, Johnson&Johnson, Apple, Boeing, Kohler, NASA, Stryker, Northrup Grumman, Oakley, Mattel, Sandia National Laboritories, US Air Force, Audi, Red Bull Racing, Citroen, Airbus, Oticon, Siemens, Widex, BMW, Mercedes, Lotus Renault GP, Fiat, VW, Olympus, Rolls Royce, Nokia, Alcoa, Casio, Daewoo, Daihatsu, Fujitsu, Fuji Xerox, Hitachi, Honda, Hyundai, Isuzu, Kyocera, LG, Mitsubishi, Nissan, Panasonic, Samsung, SEGA, Sony, Suzuki, Toyota...
    11 Feb 2013, 11:35 AM Reply Like
  • RedS10
    , contributor
    Comments (67) | Send Message
     
    The Exone S-1 IPO says that existing shareholders hold 58% of the total stock of the company, AFTER THE IPO. This is quite an "overhang," that will impact the stock price as soon as the bylaws allow for insiders to initiate sales of stock. Ol' Colonel Rockwell would be proud! LOL!

     

    Also, from my experience, shipped product that has NOT HAD it's revenue recognized CAN BE problematic. So I'm particularly curious about what's holding up the recognition, if anything. This could be a revenue gambit, but the CFO will have some explaining to do. I couldn't find there WIP to get a glimpse of their inventory posture.

     

    Lastly, I didn't find anything extraordinary about the Exone material set, except for a silica material that I believe comes from the MIT license they pay each year. Do you know more about it?

     

    I hope Exone does exceptionally well since I'm long a number of additive manufacturing stocks.
    11 Feb 2013, 11:55 AM Reply Like
  • Matt Jonza
    , contributor
    Comments (86) | Send Message
     
    Exactly. There will continue to be impressive additions to this list.

     

    But the current valuation demands more than corporate customers... if you ask me, the numbers don't add up.
    11 Feb 2013, 12:17 PM Reply Like
  • RedS10
    , contributor
    Comments (67) | Send Message
     
    FROM THE EXONE S-1 IPO: "Net cash used by operating activities increased by $5.8 million to $9.1 million for the nine months ended September 30, 2012, compared to $3.3 million for the nine months ended September 30, 2011. This was primarily due to a $5.3 million increase in inventory, as production continued for machines ordered by customers for delivery in the fourth quarter of 2012 and first quarter of 2013."

     

    To me this means we can expect, for what it's worth... AT BEST... revenue of $9.1M + the GM of about 50% or about $14M. How this ships & is recognized & how the 8 machines unrecognized are claimed would deduct or add to the posture for Q4 & Q1.

     

    LOL, for what it's worth to all those that think the US Air Force & US Military will be coming to a Cavalry rescue of Exone... ROTFFLMAO
    11 Feb 2013, 01:26 PM Reply Like
  • hazenyc
    , contributor
    Comment (1) | Send Message
     
    By any definition, XONE and the whole space is speculative, and there will certainly be a lot of volatility in the prices of these shares and potentially a lot of reward - but also a great deal of risk. With DDD for example, the company has been in existence for a long while and is growing though acquisitions as well as organically.
    But perhaps that means that XONE is already a takeover target? Who knows, it's all speculative!
    At least with SSYS and DDD there is a liquid options market where you can hedge your stock positions. XONE has no such options market yet (wait a few months), so any short term gains can only be locked in by selling shares. Keep that in mind too.
    10 Feb 2013, 10:52 PM Reply Like
  • Bellamama
    , contributor
    Comment (1) | Send Message
     
    What the person writing this article obviously doesn't realize is that "upstarts" like Shapeways are not actually manufacturers of 3D printers at all, and rather contract with other 3D printing companies to produce their goods. They simply manage it. Who do you think makes their printed metal (stainless) goods for their customers? ExOne.
    11 Feb 2013, 09:58 AM Reply Like
  • paulmichael
    , contributor
    Comments (155) | Send Message
     
    There is one other group of clients we have been ignoring thus far in our discussion, which will be a definitive game-changer for ExOne. That is the US government. Specifically the US military. Once they see how easy it is to automate parts creation on a grand scale, we will see orders for ExOne's machine triple very soon. Then of course other militaries will want to have an ExOne machine or 50 also...
    11 Feb 2013, 11:13 AM Reply Like
  • RedS10
    , contributor
    Comments (67) | Send Message
     
    Just in case you missed my previous post, I've broken out the aviation & military companies, organizations, associated with the US military & aviation.

     

    3 D Systems Customer Base...
    3D website's corporate investment presentation lists these corporations as among their customer installed base: 3M, Invisalign, Dell, GE, Delphi, Ford, Conformis, Nike, Hendrick, Honeywell, IBM, SC Johnson, Johnson&Johnson, Apple, Kohler,

     

    NASA,
    Northrup Grumman,
    Airbus,
    Boeing,
    Rolls Royce,
    Sandia National Laboratories,
    US Air Force,

     

    Stryker, Oakley, Mattel, , , Audi, Red Bull Racing, Citroen, Oticon, Siemens, Widex, BMW, Mercedes, Lotus Renault GP, Fiat, VW, Olympus, Nokia, Alcoa, Casio, Daewoo, Daihatsu, Fujitsu, Fuji Xerox, Hitachi, Honda, Hyundai, Isuzu, Kyocera, LG, Mitsubishi, Nissan, Panasonic, Samsung, SEGA, Sony, Suzuki, Toyota...
    11 Feb 2013, 12:11 PM Reply Like
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