American Superconductor (AMSC -0.59%) was once one of the high-flying companies in renewable energy. But after its biggest customer, Sinovel, allegedly stole software and trade secrets, it's been an uphill battle for the company. The fiscal fourth quarter ended March 31 didn't show a lot of improvement in an effort to return to profitability.

The quarter's numbers
Revenue fell 29% in the quarter to $20.4 million and net loss improved slightly to $19.8 million. The biggest change was a 47% drop in wind revenue to $8.9 million and the grid business held fairly steady.

Management pointed to a lower cash burn as a good sign, but cash flow from operations was negative $45.3 million in the quarter and with just $39.2 million in cash, there's not a lot of room for error. But it isn't just American Superconductor's current operations that are a concern. The future could be rough as well.  

An uphill battle
Strategically, American Superconductor is in a tough position. Its wind business was built on licensing technology to international manufacturers and making some equipment for these turbines but not manufacturing turbines itself. That's proven to be a tough strategy and most of the largest manufacturers in the world have decided to design turbines themselves. To make matters worse, the wind market has struggled over the past few years and the company will likely struggle growing the wind business going forward.

A move to get into the grid business was a good idea on the surface, but it has proven difficult to grow. The solar inverter business should continue growing quickly. However, when ABB (ABBN.Y 0.65%) made a $1 billion offer for competitor Power-One (NASDAQ: PWER), you could see the challenge beginning to grow. ABB is a huge supplier in grid infrastructure and having Power-One under its wing will build a formidable supplier that will be tough for an upstart like American Superconductor to compete against in utility-scale projects.

The superconductor business has also had its challenges and the company has found few customers with the need for such high conducting cables. Even 3M's high conducting cable has struggled to gain traction and it can be installed with existing infrastructure.

Foolish bottom line
At this point, all investors can hope for is a favorable ruling against Sinovel over stolen intellectual property and breach of contract. Without a win in a Chinese court, I don't think American Superconductor can survive. It's in a tough strategic position against huge competitors, has little cash, and creditors are unlikely to give more cash in hopes that conditions will improve. This stock just isn't worth the risk right now.