If investors bought stocks based on their names alone, I'm thinking the one I'm profiling today would double every year. Seriously, folks -- can you think of a more exciting name than American Superconductor (NASDAQ:AMSC)? Of course, that's not the way we actually do buy stocks, right? (I said right.)

Even so, when this maker of "high-temperature superconductor wires" -- as opposed to the less sexy wires made by, say, General Cable (NYSE:BGC) or Encore Wire (NASDAQ:WIRE) -- reports its Q4 and full-year 2006 earnings on Thursday, we'll be focusing less on the name, and more on what's behind it.

What analysts say:

  • Buy, sell, or waffle? Half a dozen analysts follow American Superconductor (let's just call it "Super"), giving it four buy ratings and a pair o' holds.
  • Revenue. On average, they're looking for 20% quarterly sales growth to $17.2 million.
  • Earnings. Losses are expected to contract to $0.29 per share.

What management says:
Hey, wasn't that last line supposed to talk about earnings? What's with the "losses?" Good point, and according to management, it's planning to do something about this. On March 29, it announced a restructuring "to accelerate the drive to profitability."

Apparently, up till now, the company has considered itself more of an R&D shop, like such other "alternative energy" plays as FuelCell Energy (NASDAQ:FCEL) or Plug Power (NASDAQ:PLUG). But Super now aims to "transition the company's high-temperature superconductor (HTS) products to the manufacturing stage" and start earning some serious profits.

What management does:
All together now: "About dang time!" Because from the looks of the table below, the company hasn't been bringing in enough revenue to cover much more (and usually a bit less) than the cost of its raw materials -- much less earn an operating profit, and much, much less earn a net profit.

Margin

9/05

12/05

3/06

6/06

9/06

12/06

Gross

1.4%

(4.3%)

(1.9%)

(1.9%)

0.8%

(0.2%)

Operating

(36.3%)

(54.9%)

(52.9%)

(51.7%)

(51.5%)

(58.1%)

Net

(38.9%)

(56.7%)

(60.7%)

(60.6%)

(62.6%)

(72.3%)
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ending in the named months.

One Fool says:
Now, getting back to that press release I mentioned above, here's the plan: Management wants to "cut cash burn in half" this coming fiscal year. It will need to shave about $5.3 million from its budget to accomplish that. The bulk of the savings -- some $4 million -- is to come from laying off workers, consolidating facilities, and streamlining operations. The balance will come from a combination of (1) declining capital expenditures and (2) "increasing positive cash flow from AMSC Power Systems."

Granted, that doesn't sound much like the actions a firm would take as it kicks into high gear, but as management explains, it "has never been our plan to invest in the substantial infrastructure needed to manufacture large-scale motors, generators, synchronous condensers, industrial motors and wind generators." Rather, the firm aims for a more IP-ish model, in which it may manufacture HTS wire in-house, but outsources or licenses the production of the moving parts to third parties.

Will it work? I'm just beginning to familiarize myself with the company, having only learned of its existence in the course of penning a "Wall Street's Wish List" column back in March. So for now I remain agnostic as to whether the licensing model will catch on. That said, it's hard to argue with burning less cash. Even for an alternative energy play, that would seem a less risky business model.

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Fool contributor Rich Smith does not own shares of any company named above. The Motley Fool has a disclosure policy.