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Eight Lawsuits between 3D and EOS

August 23, 2003

Filed under: additive manufacturing,legal — Terry Wohlers @ 11:36

It’s no secret that there’s bad blood between 3D Systems and German competitor EOS. What most people don’t know is that there are eight active lawsuits between the two companies. That’s right, eight of them! Patent lawsuits were filed in France, Germany, Italy, Japan, and the U.S. 3D Systems and EOS also have two contract disputes underway.

The patent litigation in the U.S. is an order of magnitude more expensive than in other countries. One of these lawsuits could be the kiss of death for either company. I’m in favor of protecting intellectual property, but why can’t these two companies seek an alternative to dropping cash into a black hole that neither can afford? If they could find a way to cooperate at some level, it would turn a lose-lose situation into a win-win for both companies.

Many years ago, an RP system manufacturer in the U.S. was faced with a probable lawsuit that would have been a major distraction and financial drain on the company. Instead, the company was able to trade rights to patents for company stock and everyone was happy in the end. More recently, I spoke with the CEO of a software company that was facing a similar situation. An advisor recommended to the CEO that they immediately take legal action for patent infringement. Instead, the CEO picked up the phone, and in 15 minutes, had worked a deal with the competitor, and everyone was satisfied. 

My advise to 3D Systems and EOS: Set aside the boxing gloves and use precious company resources in a way that benefits your customers. If you do not, you risk paying the ultimate price and everyone will lose.

Change at the Top was Overdue

August 18, 2003

Filed under: additive manufacturing,legal — Terry Wohlers @ 07:46

Last week, 3D Systems announced that Brian Service had stepped down from his position as CEO of the company. For much of Service’s tenure, the company had struggled. Among the problems and challenges: The acquisition of DTM with active involvement from the U.S. Department of Justice; a host of lawsuits; a company reorganization; arbitration with Vantico; a potential NASDAQ delisting; an extensive investigation of accounting practices at the company; numerous layoffs; and a string of losing quarters. 

It’s unclear what took so long for 3D’s Board of Directors to make adjustments to the company’s top management. In April, CFO James Selzer, was terminated. In May, accountant Grant Flaharty agreed to step down from his position as president and COO. Subsequently, he was put in charge of sales for the Americas. Kevin McAlea, a former DTM vice president, has since been promoted to a senior position in charge of marketing and sales worldwide. With Kevin’s strong product and customer focus, this was a good move by the company.

Meanwhile, Brian Service will continue employment with 3D System for two more years. His job will be to “assist with various clients and transactions,” according to the Form 10-Q filed on August 11. His payment: Almost $0.5 million.

The Need for Speed

August 4, 2003

Filed under: additive manufacturing — Terry Wohlers @ 07:58

In product development, many believe that speed isn’t everything, but almost. For this reason, one might assume that the fastest machines for rapid prototyping are the most popular. Among the fastest are those using raster printing techniques that swiftly build layer after layer. On the horizon are new developments in machine technology that use a method of imaging an entire layer at once, promising to outpace the raster approaches.

Most would agree that the machines from Stratasys are not the fastest on the market. The company’s Fused Deposition Modeling (FDM) is a vector-based approach, analogous to a pen plotter. Pen plotting was once a standard method of printing large format documents, but it has since been replaced by much faster raster devices. Despite its vector approach, one cannot argue with the impressive success that Stratasys is experiencing. For the first six months of this year, the company’s revenue grew by 37%, with net income of $2.66 million, and a 77% increase in unit sales. What’s more, its stock has rocketed from about $5 in October 2002 to more than $40 last week. That’s an increase of more than eight times. 

So what does Stratasys have that is missing at some of its competitors? First, I believe the company has strong leadership and management. Scott Crump, CEO, has a hands-on approach (he’s an engineer) and connects well with employees, customers, and others. Some managers and employees have been at Stratasys for more than a decade, so that says something about the company. 

Stratasys offers sound technology packaged into products that are affordable and easy to operate and maintain. This cannot be said about some of its competitors. FDM materials, such as ABS plastic, provide excellent mechanical properties. Also, the company’s introduction of WaterWorks was an important milestone. This method of removing support material greatly reduces time and cost. In the end, it improves overall throughput, helping to make up for losses in speed from the deposition process. 

Last but not least, the introduction of the $29,900 Dimension product exceeded expectations inside and outside the company. With this product, coupled with the almost flawless execution of its sales and marketing strategy, Stratasys is doing very well. Hats off to the company.