April 6, 2011
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: After the closing bell last night, American Superconductor (Nasdaq: AMSC ) announced its largest customer, Sinovel, had refused contracted shipments. The stock plummeted as much as 50% today.
So what: The March shipment and payment for some 2010 shipments are currently in limbo and will have a huge impact on fiscal-fourth-quarter results. The company now expects revenue for the quarter to be just $42 million, and a loss on the bottom line.
Now what: The company's reliance on Sinovel came back to bite it at a bad time today. I'm cautiously optimistic the $4.73 per share in cash the company has on hand will stop further bleeding, but it will take awhile to prove other customers and products can pick up the slack. I'm watching the drop from the sidelines, too cautious to buy more and seeing too much opportunity to sell right now.
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