Hewlett-Packard Co. will soon begin shipping 3-D
printers manufactured by Stratasys to five European countries under
a partnership announced in January. The goal of the agreement is for HP to sell
Stratasys-made 3-D printers globally. If successful, Stratasys will have to
dramatically ramp up production at its Eden Prairie, MN assembly plant.
"We believe the time is right for 3-D printing to
become mainstream," says Stratasys Chairman and CEO
Scott Crump. "We also believe that HP's unmatched sales and distribution
capabilities and Stratasys FDM technology is the right combination to achieve
broader 3-D printer usage worldwide. HP has made a similar move in this market
before, capturing a dominant position in large-format 2-D printers. Together we
hope to repeat this success with 3-D printers."
HP's Graphic Solutions Business — part of the company's
$24 billion Imaging and Printing Group — will execute the distribution
agreement. HP is a leading provider of Designjet and Scitex large-format
printing solutions, Indigo digital solutions for commercial and industrial
printing, inkjet high-speed production solutions and specialty printing
Under the terms of the agreement, Stratasys will develop
and manufacture for HP an exclusive line of 3-D printers based on Stratasys'
patented Fused Deposition Modeling (FDM) technology. HP will begin a phased
rollout of the 3-D printers in the mechanical design (MCAD) market in selected
countries, with the right to extend distribution globally.
It's possible the global demand for 3-D printers could
expand to about 50,000 units. About 4,000 3-D printers are sold annually now,
with Stratasys leading the field in volume.
In connection with the agreement, Stratasys issued a
warrant to HP to purchase 500,000 shares of common stock at an exercise price
of $17.78 per share, which vests immediately. The price was based on an average
of the company's stock prices around the time the agreement was executed. The
purpose of the warrant was to allow HP to participate in any improvement in the
price of Stratasys stock as a result of the agreement. Stratasys stock has been
trading in the $27-$28 range recently.