In Wednesday's meeting with shareholders,
To HP's credit, they're hardly rushing into 3D printing marketplace. The company had an agreement in 2010 to market HP-branded Stratasys 3D printers, but the deal dissolved in 2012. More recently, HP has provided inkjet printheads to Z Corp, a 3D printing company that is now owned by 3D Systems. And in yesterday's shareholder meeting, even Whitman acknowledged that 3D printing as an industry has some areas it needs to improve before it goes mainstream.
"Have you ever watched a 3D printer print?" she asked in response to a shareholder question on the subject. "It is like watching ice melt." She also noted that the quality of 3D-printed objects isn't as good as it should be -- but Whitman thinks that HP has solved both of those problems, hence the "big technology announcement" that is planned for June. Though Whitman did not elaborate on exactly what this announcement will include, she did say that whatever HP offers will "focus on business side before we get to the consumer side. We think the bigger market will be in enterprise space," helping companies manufacture parts and test prototypes rather than helping regular folks print Hershey Kisses at home.
Amit Daryanani, an analyst at RBC Capital Markets, sees Whitman's comments as a potential boon to companies like 3D Systems and Stratasys. "We believe HP’s enthusiasm and increased involvement in the 3D printing space should provide fundamental support for 3D Systems and Stratasys near term as it validates the viability of 3D printing technology and increased use cases available to disrupt the $10 trillion global manufacturing industry," he wrote in a research note on Thursday. "In addition, we think it provides HP an attractive and exciting growth vector to enable high-margin revenue growth that could ultimately bolster HP's valuation."
While Daryanani believes that an HP foray into 3D printing would validate the attractiveness of the "high-growth" industry -- and that rather than increase competition among 3D printing players, HP's entry would open up the market -- a recent and worse-than-expected earnings report from 3D company ExOne gives ammunition to the bear case for the 3D printing industry. As Whitman was announcing that HP is "on the case" of 3D printing, ExOne was posting a fourth quarter operating loss of $3.1 million and a full-year operating loss of $6.5 million, resulting in a per-share loss of 22 cents for the fourth quarter -- missing the Street consensus by a whopping 23-cent margin -- and 51 cents for the full year. ExOne said that its profit and margin were impacted by "lower volume, sales mix and a higher cost base."
In commenting on his company's results, ExOne chairman and CEO S. Kent Rockwell noted that "we can't predict timing of our customers' behavior with accuracy," but also that "we believe that the adoption of 3D printing in industrial manufacturing applications is gaining momentum in our global marketplace."
As a result of this disappointing earnings result, shares of ExOne have been trading for about a 9% decline throughout regular trading on Thursday, and 3D Systems and Stratasys shares have been similarly hit by ExOne's bad fortune: 3D Systems is down 2.6% and Stratasys is down 0.9%. A longer-term look at all of these names provides additional reason for concern: after posting 150%, 128% and 65% growth in 2013 (3D Systems, ExOne and Stratasys, respectively), they are already down 33%, 30% and 13% for the 2014 thus far. HP, meanwhile, is humming along quite nicely without any 3D printing business: after posting an 86% return in 2013, it has beaten the broader market in 2014 so far, posting a 14% return.
Related from Forbes:
