Make no mistake about it, Google Inc (NASDAQ:GOOG) is going to be one of the largest suppliers of robotics in the world. Currently the company is working on producing driverless technology, automobiles that run purely on software, eliminating the human error from driving, freeing us up to do other things (I have written two columns elaborating, Part I and Part II.) Whether or not they ultimately create the hardware (cars) for it is another still-developing story, but the software is a certainty, and already being deployed on the roads.
Furthermore, it is no coincidence that Google Inc (NASDAQ:GOOG) has a rather large division called “Android.” Bet your bottom dollar, as I have, that Google will at minimum be developing software for other robotics.
iRobot was founded by guys from MIT (meaning that the egghead cultures are likely to get along well) and currently trades well below its 2006 IPO price. Since that time the company has expanded beyond household robotics (including the Roomba) into both military robotics and a healthcare bot, which just recently gained FDA approval to be roaming the halls of hospitals around the nation.
Taking a look at iRobot’s balance sheet, there is zero debt, a market cap just south of $600 million. The company has had generally positive cash flow, though it did acquire Evolution Robotics last year for $74 million, and it wound down its defense and security system because of cutbacks in defense spending, which affected the bottom line, the latter leading to a fourth quarter loss.
Additionally iRobot has a wonderful patent portfolio that I don’t believe is fully valued by the market.
Honestly, I believe that iRobot is undervalued, the stock has no froth. How often do you hear people mention the stock in the same breathless way they might Apple Inc. (NASDAQ:AAPL), or Google Inc (NASDAQ:GOOG) for that matter?
iRobot’s Roomba has been around 10 years, but they have done very little to market their product to the masses or even to build brand awareness. Although they have made small strides in this area, at least marketing to Patriot fans at the games and creating a series of short “sitcoms” (watch a 50-second one) about iRobot products cleaning the house of one of New England’s starting linemen, Vince Wilfork, which actually I found strangely effective.