Small Cap Strategist is published by Crystal Equity Research an independent research resource on small capitalization stocks. Follow along as we discuss the most recent trends in the small-cap sector, investigate interesting companies and pan a few not-so-promising stocks.
Technologies (XIDE:Nasdaq) is one of the
largest transportation and industrial battery suppliers in the U.S., vying for
market share with Johnson Controls (JCI:NYSE) and EnerSys
others.Batteries are a competitive
business, even as the automotive sector has attempted a recovery from the 2008
free fall in new car sales.Electric vehicle
and renewable energy storage applications have helped expand addressable
market.However, for a conventional
battery producer capturing a share of these markets requires new technology.
long-time lead-acid battery supplier, Exide makes a show of its research and development effort, but
fails to disclose the amount the company spends on R&D.It could be hidden away in Selling, General
and Administrative expenses.Exide
reports SG&A near 14% of sales over the past four years.If this expense category includes the
company’s R&D effort, it is less than impressive.
course, internal development programs are not the only way to build a
technology base.In late 2008, Exide
acquired Mountain Power, a privately-held developmental-stage
company that had a proprietary battery management system with additional
monitoring features for proven lithium-ion cell technologies.This appears to be Exide’s first foray into lithium
technologies and represented a big leap from the company’s lead-acid history.
in early 2009, Exide entered into a technology development agreement with
privately held NanoTerra, a developer that
claims particular expertise in the design of nano-materials and their
application to surfaces and bulk materials. It is not clear whether Exide has deployed
NanoTerra’s findings in any of Exide batteries.
the same year, Exide signed a memorandum of understanding with Axion Power Technologies (AXPW:Nasdaq) for the future purchase
of Axion’s PbC batteries and the
license of Axion’s lead-carbon electrode technologies.Exide never got around to formalizing the
relationship or ordering Axion batteries, but a few months after the MOU was
signed the affiliation made good reading in Exide’s application for Recovery
Act funds from the Department of Energy.The application named Axion as a partner and promised to increase
manufacturing capacity at its Columbus and Bristol facilities where Exide was
to produce Absorbed Glass Mat (AGM) batteries “using lead-carbon electrodes for
micro-hybrid applications.”In recent
discussions Exide has begun referring to the ARRA-funded capacity augmentation
in terms of batteries “with or without” lead-carbon technologies- enhancements that Axion was ostensibly to
bring to the party.
was busy making friends in 2009.The
company also entered into a cooperative research and development agreement with
River National Laboratory and the University
of Idaho.The troika was set up to study the benefits
of hollow glass microspheres in lead-acid batteries.Researchers in Idaho have found that among
other benefits the use of these glass microspheres could reduce battery weight,
a big plus for the large battery systems needed for electric vehicles and renewable
energy storage solutions.
recently Exide has entered into a “strategic alliance” with Maxwell Technologies (MXWL:Nasdaq).The two have pledged to work together on integrating
Maxwell’s ultra-capacitor technology with Exide’s batteries for use in storage
applications.It seems like a tall order
as the two technologies could not be more diverse.Ultra-capacitors store energy in an electric
field while batteries produce and store energy by means of a chemical reaction.Like the Axion relationship, there is nothing
binding on either Maxwell or Exide. The
press release is probably longer than the ‘alliance’ paperwork, so if any new
technologies arise from the collaboration, the two will have to work out who
is not the first manufacturer to rely on third-party relationships for research
and development.However, if Johnson
Control’s is successful in acquiring the automotive assets of bankrupt A123 Systems’ (AONEQ:OTC/BB), Exide may be under more competitive pressure.The deal would involve the transfer of
supporting technologies and could give Johnson Controls an edge over Exide in the
transportation market that appears to be centering on lithium ion technologies.That means Exide will need to do more than
bootstrap its reputation as an innovator with press releases and MOUs.
Neither the author
of the Small
Cap Strategist web log, Crystal Equity
Research nor its affiliates have a beneficial interest in the companies