American Superconductor Gets Shocked

Heading into this morning's earnings release, American Superconductor (Nasdaq: AMSC  ) investors might have felt optimism tinged with nostalgia. After all, analysts were predicting that sales would more than double, and that the firm's losses (per share, at least) of yesteryear would decrease by one-third.

And then the news broke. At first glance, it looked pretty good. Super grew its sales more than expected, booking $21.6 million in revenue -- a 125% increase year over year. It also booked $129 million in new business during the quarter, pushing its backlog up to $180 million for a 140% increase. CFO David Henry predicts that the growth will continue throughout this year and the next, with revenue reaching as much as $110 million in the "new and improved" fiscal 2007, and "strong growth ... into fiscal 2008 as well."

So why's the stock down?
Possibly because, for all the revenue it's earning, Super still seems incapable of earning a profit. Mind you, its loss position improved last quarter. Most of the reduction in per-share losses gets ascribed to the firm's recent round of stock dilution, which helped the company reduce its per-share loss last quarter as well. But the net loss also declined, from $7 million in "last" year's Q2 to $6.7 million this time around. Still far from the finish line, Super is at least moving ever so slowly toward joining competitors like GE (NYSE: GE  ) , Siemens (NYSE: SI  ) , Rockwell (NYSE: ROK  ) , and DRS (NYSE: DRS  ) in earning an actual profit.

One step forward, two steps back
Speaking of which, here's one factoid that may be contributing to today's share-price decline: Super is moving ahead with its plans to consolidate operations in Massachusetts. Aimed at reducing costs in the long run, this will entail perhaps $6 million in charges to earnings, most of which will hit in the current third fiscal quarter. Combined with "increased operating expenses," "higher stock compensation expense," and other charges, Super felt this necessitated an earnings warning. Instead of losing the previously promised $0.54 to $0.62 per share this year, it now anticipates a $0.70 to $0.81 per-share loss.

All of which leads shareholders to ask: What's so super about that?

What did we expect out of American Superconductor last quarter, and was the news really super? Find out in:


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