June 1, 2011
American Superconductor (Nasdaq: AMSC ) has been through a rough two-month stretch -- and a press release yesterday didn’t make matters any better. The company delayed its quarterly report and gave us a few hints at what we might expect when it finally does announce earnings.
What we know is:
- AMSC missed its filing deadline yesterday and filed for a 15-day extension.
- American Superconductor will revise previously reported revenue from 2010 to account for what was and will be paid for. Of note: the “less than $355 million” in revenue it previously disclosed sounds more like a lot less. Details are light right now, but reading between the lines we know that Sinovel did not pay for all shipments made in previous quarters and as a result AMSC will modify financial statements.
- The company is looking for additional financing to finish The Switch acquisition.
- AMSC expects Sinovel to be a customer in the future despite the mess they’ve caused for the company.
- The company is cutting head count and other costs to spend in line with revenue.
But there is still a lot of uncertainty:
- We have no idea if the Sinovel folly will be something other customers will attempt to repeat or how big of a customer Sinovel will be in the future.
- The company has not given us any indication that its inverter or superconductor business will be affected by the Sinovel fiasco or how these businesses are performing.
The market has been pricing in bad news since the first Sinovel announcement, but we don’t really know how much bad news to expect. I’m a little surprised shares have fallen 17% today since we knew pretty much everything in the press release before yesterday.
A new focus will now be put on the inverter business, which will compete with Power-One (Nasdaq: PWER ) and Satcon Technology (Nasdaq: SATC ) for renewable energy projects. Management had high hopes for this business and with the wind business faltering the company may have to change focus.
Superconductors will also be key. This business has just recently started getting a little bit of traction and it may need more to help the company’s stock.
Foolish bottom line
Basically, there is still uncertainty for AMSC and investors are increasingly skittish about the stock. I’m not sure how much farther it can fall, but with $169 million in cash to end 2010 and zero debt, there must be a bottom somewhere. Even if it has to take out debt to complete the $265 million The Switch acquisition -- or call it off all together -- I don’t see AMSC nearing bankruptcy. Insiders have been buying shares lately and I will consider doing the same once we get a little more certainty from the company.
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