Friday, October 19, 2012

Last Battery Developer Standing

Advanced battery producer A123 Systems, Inc. (AONE: Nasdaq) has flamed out, with the cinders of its lithium ion technologies snapped up by Johnson Controls, Inc. (JCI:  NYSE).  Much has been written in the financial press over the past few weeks about the fate of A123 and the next step by Johnson Controls.  What is more, because A123 had received government loan assistance, the political pundits have taken advantage of the company’s embarrassment to make their case for or against government in general and public alternative energy investment in particular.

What really has me wondering is what this turn of events means for the other upstart battery producers. 

Two prominent advanced battery developers have sought bankruptcy protection already.  Ener1, Inc. (private, previously HEVVQ:  OTC/PK) filed for bankruptcy protection in early 2012.  Ener1’s operating subsidiary EnerDel survived through an acquisition by Russian investor Boris Zingarevich.  Valence Technology, Inc. (VLNCQ:  OTC/PK) filed for bankruptcy protection in July 2012, and is currently operate its business as a debtor-in-possession.  That final chapter in that story has not been written.

That leaves still standing at least three other developers which are attempting to commercialize advanced battery technologies:  Altair Nanotechnologies, Inc. (ALTI:  Nasdaq), privately-held Winston Battery in China and Maxwell Technologies, Inc. (MXWL:  Nasdaq).  Flux Power Holdings, Inc. (FLUX:  Nasdaq) is another recent entrant to the lithium ion race.  Maxwell Technologies, Inc. (MXWL:  Nasdaq) is trying to challenge all the lithium ion battery makers with ultracapacitors.  

A123 Systems spent $186 million on research and development over the last three and a half years and ran up a $329.1 million loss on $151.9 million in sales in the company’s last fiscal year ending June 2012.  Numbers like those could lead an investor to suspect mismanagement.  Have the others operated with greater prudence?

In a new series on advanced battery technologies, we will look at spending on research and development by these companies and make some comparisons of operating strategies.    

 

Neither the author of the Small Cap Strategist web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.

 

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