You're forgiven if you never heard of A123 Systems
In the just-reported second quarter, A123 saw sales bubbling up from $19.7 million last year to $22.6 million this time around. Given the early stages of this business, and the wild swings in each of its reportable segments, the jump could just as well have gone in the opposite direction. Lumpy sales are a fact of life on these small scales. Net losses added up to $34.2 million -- yes, the loss was bigger than total revenues -- or $0.33 per share, which was tougher than the $21.9 million loss seen a year ago.
So how about those economies of scale? A123 is building out its manufacturing capacity something fierce, hoping to have as much as 1,000 megawatt-hours of annual battery-making capacity online by the end of 2011. For those keeping score at home, that would be enough to support more than $650 million in annual revenue, and it's a drastic improvement from current run rates. That's the kind of scale the company needs in order to turn a profit.
There is a lot of competition in the rechargeable battery space, chiefly from Panasonic
Automotive partners already include Chrysler, BMW (OTC BB: BAMXF.PK), and Navistar
Electric power is the new little black dress, and unless A123 burns through its entire cash hoard before getting to the big time, this should be a market-beating winner over the next four to six years. There's more than $400 million left on the balance sheet, and the cash burn isn't all that horrific anymore. I'm putting my CAPS rating where my mouth is, and rating A123 a long-term market crusher in CAPS. Feel free to join me, whether you agree wholeheartedly or think I'm insane.
Fool contributor Anders Bylund holds no position in any of the companies discussed here. He wishes someone would make batteries charge quickly enough to reap energy from lightning strikes -- that would be a killer product here in the lightning capital of the Western Hemisphere. Try any of our Foolish newsletters today, free for 30 days. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.