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Hewlett-Packard Prepares Entry in Rapid Prototyping

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 systems.

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.

TAGS: Automation
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