Premium provider of comprehensive 3D digital design and fabrication solutions, 3D Systems Corp. DDD, recently announced its decision to cease the production of Cube, the entry-level consumer 3D printer. This initiative comes as part of the company’s plan to channelize its resources toward more lucrative areas in professional and industrial markets.
Despite the decision to terminate Cube’s production, the company will continue to manufacture CubePro printers, which are extensively deployed in desktop engineering, educational and professional applications. While there will be no further production of Cube, existing inventory of $999 Cube printers will be sold till the stock lasts.
Cubify.com, the company’s consumer platform for Cube printers, will be shut down in Jan 2016; and associated retail products like phone cases and jewelry will also be suspended. According to the company, though termination of this product line will impact revenues marginally (less than 2%), it will help enhance profitability in the long run. Also, steering away from consumer products will allow management to deploy resources for manufacturing applications that promise higher returns on investment, and thereby boost earnings.
3D Systems remains optimistic regarding opportunities in companies that are keen to transform their existing workflow, improve product designs and develop innovative items. The company believes that by streamlining its portfolio and coming up with novel manufacturing solutions, it will be able to duly address customer needs as well as drive profitability.
Of late, 3D Systems has rattled investors as it faces multiple headwinds like weakening net income, unimpressive equity returns and operating cash flow. Moreover, the present challenging market conditions, which have reduced customers' capital investment cycles and demand for 3D printing products & services, will likely continue to bother the company’s financials in the near term. Consequently, the strategic efforts to prune its low-margin portfolio is an effort to turn the tables in the long run.
3D Systems currently has a Zacks Rank #5 (Strong Sell). Better-ranked stocks in the sector include Avago Technologies Ltd. AVGO, Arista Networks, Inc. ANET and Alphabet Inc. GOOGL. All the three stocks hold a Zacks Rank #2 (Buy).
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