I had high hopes for AeroVironment (Nasdaq: AVAV) when it announced earnings earlier this week. But the company -- let's just call it AV for short -- dashed every one of them.

I'd hoped that the military's continuing push to convert to an unmanned air force would reward AV, just as it's rewarded unmanned aerial vehicle (UAV) stars Boeing (NYSE: BA) and General Atomics, Textron (NYSE: TXT), and Northrop Grumman (NYSE: NOC) -- larger manufacturers of larger unmanned aerial vehicles than AV's Ravens, Wasps, and Pumas. Instead, AV reported that the year's UAV sales remain down more than 9% in comparison to the first nine months of last year.

I'd hoped that Nissan's (Nasdaq: NSANY) entry into an electric-car race, so far dominated by the likes of Ford (NYSE: F), Toyota (NYSE: TM), and Chevy, would increase sales of partner AV's rapid-battery-charging PosiCharge products. Instead, sales year to date in AV's Efficient Energy Systems (EES) segment amount to just 65% of what the company had accomplished through the third quarter last year.

Thus far this year, AV actually "succeeded" only in posting disappointing revenue, and pushing the sales it should have made this year into fiscal 2011 instead.

Good news, bad news
In part, this was to be expected. The military still loves AV's UAVs; it even wants to upgrade its existing Raven fleet to all-digital technology. AV's been busy getting the transition together, and while it's been occupied retrofitting the old birds, it's been less able to sell new birds. Recent contract awards show that its efforts are progressing -- but the even more recent financial results show that the progress is slow.

The news gets worse. In Tuesday's earnings report, AV avoided mentioning that despite reporting profits for the quarter and the year, it's deeply in the red from a cash-profits perspective. Free cash flow for the year now stands at negative $19.1 million -- a metaphorical crash-landing in comparison to the $12 million in cash AV piled up over the course of the first three quarters of fiscal 2009. Don't get me wrong -- I'm all in favor of seeing GAAP profits, too. But I'd rather AV "show me the money."

Foolish takeaway
So far, all AV's showed us this year is a string of excuses about budgetary delays, tardy Pentagon procurement, and most recently, "severe weather conditions [that] limited acceptance testing of many Raven systems and the sales those systems would have generated." Sorry, folks, but that's just not good enough.

Memo to AeroVironment management: "We'll do better next year," is not a business plan.

Memo to AV shareholders: It's not a reason to buy the stock, either.

AV's stock has lagged the market badly over the past year. How do you tell a bargain stock from a value trap? Find out here.

Fool contributor Rich Smith is currently, and he hopes temporarily, embarrassed to admit that he owns shares of AeroVironment. AeroVironment is a Motley Fool Rule Breakers pick. Ford Motor is a Motley Fool Stock Advisor choice. The Motley Fool has a disclosure policy.