Every so often, there's a technology that's so compelling in what it might do that I add companies that produce it to a watch list. One such company for me was American Superconductor
Back in 2001, the future of superconductors was dawning. High temperature superconductors (HTS) were going to provide ways to stabilize the power grid (fixing a real problem) and produce small but highly efficient industrial electric motors (a key way to reduce electrical demand). The hope was that American Superconductor would be producing products and be profitable in 2004. Guess what? Profitability didn't happen.
But American Superconductor reported third-quarter results today that were, relatively speaking, super. Revenue increased 89% from the year-ago third quarter to a record $23.2 million, and the net loss decreased from $6.5 million to $2.5 million. Obviously, the trends are headed in the right direction, and none other than General Electric
The outlook is promising, too. The order backlog sits at $36.9 million. The debt-free company has $45.5 million in cash and equivalents. On the other hand, it barely raised full-year revenue targets, from $55 to $60 million to $58 to $61 million, but it said the anticipated net loss will be $16 to $18 million, a healthy betterment of the earlier forecast of $20 to $23 million.
Enhancing the promise is the company's move to accelerate the commercialization of its second-generation (2G) wire that can be produced for two to five times less than the current technology. And the company is confident: "We also believe, based on our evaluations of competing 2G HTS wire manufacturing methodologies, that our commercial 2G HTS wire will have higher electrical performance at lower manufacturing costs than any competing approach."
The competition includes smaller corporations like profitable IntermagneticsGeneral
Although the company recently filed to sell 4 million new shares, its share base is still quite small at 27.8 million shares. Investors may want to wait and see how 2G wire is accepted and whether the company can move motor products into commercialization. But for those who've been waiting for superconducting to move from the lab to commercialization, that move looks to have finally gotten under way. And American Superconductor finally looks to be within sight of its long-awaited profitability milestone.
Fool contributor W.D. Crotty does not own stock in any of the companies mentioned, although American Superconductor is on his watch list. Click here to see The Motley Fool's disclosure policy.
