Fuel Cell Non-Glory

Today's earnings report out of Ballard Power (Nasdaq: BLDP) did little to further hopes that fuel cell companies will soon recapture their past glory. Revenue decreased and net losses increased from last year's fourth quarter. The company also forecast declining revenue and increased cash consumption for 2004.

If there was a bright side to 2003, it's that Ballard shipped fuel cell engines to partners DaimlerChrysler (NYSE: DCX) and Ford (NYSE: F), and fuel cells to Honda (NYSE: HMC). It is that momentum that keeps investors interested.

The company also cut its cash burn to $39.9 million for the year -- a 66% decrease. Even with $278 million on the balance sheet, cash consumption will be closely watched because profitable fuel cell commercialization is still years away.

Meanwhile, the fervor over fuel cell stocks has flickered, and Ballard, a high-flier that peaked at $144.94 in March 2000, opened at $11.55 today. Even financial partners have lost their lust for fuel cells. Last March, FirstEnergy (NYSE: FE) exchanged its interest in Ballard's stationary power generator business for Ballard stock.

As Alyce Lomax reported last week, General Motors (NYSE: GM) is developing a stationary fuel cell to power a manufacturing plant. GM is also focusing on the transportation market that once powered Ballard's stock into the stratosphere. Clearly, Ballard has to contend with some big-name competition.

As it stands, Ballard owes its $1.3 billion market cap largely to the strength of its partnerships and its strong patent position. All the same, without profits on the horizon, waiting for Ballard to return to glory requires a leap of faith.

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Motley Fool contributor W.D. Crotty does not own any of the stocks mentioned. You can reach him by email.