The tail wind that Broadwind Energy (Nasdaq: BWEN) expected in the second half of 2010 has failed to materialize, leaving shareholders wanting for breezier days.
Revenue was up 4% from last quarter to $38.2 million but was down 36% year over year. Net loss in the quarter stood at $8.3 million, or $0.08 per share, despite an 11% reduction in selling, general, and administration expenses.
The overall decline of the U.S. wind market was mostly to blame. Wind capacity additions were down to 395 MW, off 75% from last year and well below Broadwind's hopes after the second quarter.
As a result of lower overall demand, there is a glut of supply in the tower and gear markets that Broadwind serves. If this continues, the company is prepared to cut capacity in the U,S.
This leaves Broadwind in a rough spot, waiting for increased industry activity and hoping the U.S. dollar stays low or the Chinese are found to be subsidizing product headed for the U.S. as the steelworkers union suggests. Chinese companies are the source of American Superconductor's (Nasdaq: AMSC) success in the market, and the balance of power in the industry seems to be shifting to China.
But industry trends could play to Broadwind's strengths, eventually. Manufacturers including General Electric (NYSE: GE) and Siemens (NYSE: SI) are pushing bigger turbines and offshore turbines that are Broadwind's strength. The only question is how fast these turbines will catch on.
No matter how the market plays out Broadwind is largely at the mercy of others in the dynamic wind market. I've had hope for the winds of change to blow in more quickly but it appears Broadwind investors will have to wait longer for a turnaround.
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