Tic-tac-toe, investors want to know: After missing consensus earnings estimates in each of the last two quarters, will Energy Conversion Devices (NASDAQ:ENER) make it three in a row? The alternative energy technology company reports fiscal Q4 2007 earnings Wednesday morning.

What analysts say:

  • Buy, sell, or waffle? Ten analysts still follow Energy Conversion Devices (ECD). Seven say to buy it, and three to hold.
  • Revenue. On average, they expect to see 26% quarterly sales growth to $35.1 million.
  • Earnings. The per-share loss is expected to widen to $0.12.

What management says:
Back in May, Energy Conversion Devices Chief Operating Officer James Metzger opined that ECD was in the midst of a "comprehensive restructuring plan to move ECD toward sustainable profitability and shift the emphasis of the company's operating strategy from research and development to commercialization and marketing." To accomplish this, Metzger said the company was "committed to taking the steps necessary to evolve ECD into a profitable enterprise."

Apparently, one of the first "steps necessary" was to ditch the CEO. Earlier this month, we learned that CEO Robert Stempel, formerly of General Motors (NYSE:GM), is out. Mark Morelli, himself formerly of United Technologies (NYSE:UTX), is in, effective Sept. 1. Morelli won't come cheap, though. He's getting a $450,000-per-year salary, plus a guaranteed bonus of $300,000 (will someone please explain to me how a "guaranteed bonus" is something other than a salary?).

What management does:
Morelli certainly has his work cut out for him if Energy Conversion Devices is to complete its conversion from research and development shop to profitable enterprise. Gross margins have been falling all year long, and the previously improving operating and net margins are once again headed the wrong way, as losses expand.

Margins

12/05

3/06

6/06

9/06

12/06

3/07

Gross

16.3%

20.6%

22.4%

22.4%

22.1%

19.6%

Operating

(37.5%)

(30.1%)

(26.7%)

(26.3%)

(27.3%)

(30.4%)

Net

(35.2%)

(25.9%)

(18.2%)

(13.6%)

(11.1%)

(12.2%)

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

One Fool says:
Under for-now-CEO Stempel, there's been a bit of a disconnect at ECD. On the one hand, Stempel paints a bright picture of growth, saying that: "The photovoltaic market continues its robust growth. ... We effectively doubled our capacity this past year and are looking to double it again in the next year [and] are aggressively expanding our photovoltaic marketing and sales efforts to better align with our expansion."

Meanwhile, however, ECD's sales are up just 4% year over year so far in fiscal 2007. Research and development -- the growth fuel of any tech company -- has risen a similarly anemic 4%. About the only bright light is that operating costs are flat year over year. The company isn't spending itself into the ground, but neither is it growing particularly fast. Morelli's job, therefore, will be to put actions behind Stempel's brave words. With any luck, he'll be given the chance to tell us how he plans to do that on Wednesday.

For further Foolishness on Energy Conversion Devices, read:

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

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.