Update Maxwell Technologies (MXWL)
2010 marks a very important transition for Maxwell Technologies (MXWL), one that unfortunately, won’t make life easy for the company given the state of the auto and alternative energy industries. You can see the results of that transition in the company’s somewhat disappointing earnings for the first quarter of 2010.
Maxwell really runs two businesses.
One business is composed of the older microelectronics (radiation hardened components and computers for use in space) and transmission (capacitors used in high-voltage electrical transmission lines) product lines. Back in 2006 these product lines accounted for two-thirds of the company’s sales.
The other business is composed of the company’s newer ultracapacitor BOOSTCap products. These fast-charge, fast-discharge energy storage devices are gradually winning design competitions and getting built into products from auto, truck, and bus electrical systems to wind turbines. In the first quarter of 2010 sales from the BOOSTCAP business finally exceeded sales from the microelectronics and transmission business. And, according to estimates from Needham & Co., BOOSTCap will account for 55% of sales in 2010.
In the long-term this trend is exactly what investors want to see. Needham estimates that BOOSTCap revenues will grow by 52% from 2010 to 2011.
In the short-term, however, this trend is a problem for Maxwell Technologies for two reasons.
The Gulf oil spill is so bad that maybe, just maybe, energy legislation is alive again
You knew this was coming once BP (BP) admitted that the top kill effort to stop the flow of oil in the Gulf of Mexico had failed.
On Tuesday June 1 U.S. Attorney General announced that the Justice Department has opened a civil and criminal investigation into BP and other companies involved in the Deepwater Horizon disaster. Holder’s announcement came just hours after President Barack Obama promised in a 10-minute White House address to prosecute any parties found to have broken the law.
What comes next? More politicians who can tell which way the wind is blowing and feel that they need to do something before the storm blows them away. I think the need to be seen doing something might even result in action in Washington to move the country away, even if only so slightly, from its dependence on oil.
Stranger things have happened when politicians are running scared.
There’s no quick end in sight to the flow into the Gulf. BP doesn’t have a real solution—the oil company is next going to try a new version of the containment dome that failed to work before the top kill failed to work. And the truth is that the federal government is completely dependent on the oil company and its service and drilling contractors for any equipment that might stop the flow.
But that hasn’t stopped the buildup of political pressure on the Obama administration and other elected officials in Washington to do something—or at least to sound like it is doing something. So an angry President Obama, sounding like a prosecutor himself, said “My solemn pledge is that we will bring those responsible to justice.”
3 stocks for investing in China’s mighty wind power industry
In August 2007 only one Chinese wind turbine maker, Xinjiang Goldwind, made Merrill Lynch’s list of the top ten wind turbine makers in the world.
In 2010 two Chinese companies Xinjiang Goldwind and Sinovel Wind Group both make the top 5. Sinovel has climbed to No. 3 in the world.
Even though neither company sells much of anything outside of China. (In 2009 the two companies exported 20 units with a total capacity of 29 megawatts.)
The growth story is spectacular but not especially surprising. $47 billion of China’s stimulus spending over the last two years went into alternative power generation such as solar and wind. A local content law that required 50% of any turbine purchased with government money to be made in China was revised to require 70% local content.
China installed two times the number of wind turbines in 2009 than it had in 2008. Wind power capacity soared to 25.8 gigawatts in 2009 from 12.2 gigawatts in 2008. And in 2010 plans are to add another 18 gigawatts of capacity.
The disaster in the Gulf has killed the chance for a national energy policy: here are the winners and losers, if I’m right
The list of casualties from the explosion at Transocean’s (RIG) Deepwater Horizon just keeps getting longer.
There are the 11 rig workers who died in the fire. The reputation of BP (BP), the owner of the oil, Transocean, the owner and operator of the rig, and Halliburton (HAL), the company that at the time of the explosion was pouring the concrete that was to seal the well. The wetland ecologies of the Gulf coast. The fishermen and shrimpers who make a living from these waters. The towns and communities that depend on the Gulf for their economic life blood.
And somewhere in that list of casualties you should add national energy policy.
Certainly any national energy policy that’s built on cap and trade or a carbon tax or any other mechanism for fighting global climate change is now dead. And maybe even the kind of smaller, focused energy bill that Senate majority leader Harry Reid (Dem.-NV) started to talk up last weekend.
One of the strange consequences of the Deepwater Horizon disaster is that it has reduced the chances for any kind of comprehensive energy plan in the near future to between slim and none
Not because the United States doesn’t need a national energy policy. We do. Desperately. The disaster in the Gulf of Mexico just makes that clearer.
Update watch list stock A123 Systems (AONE)
Lithium-ion battery maker A123 (AONE) is an object lesson in why buying into popular IPOs (initial public offerings) can be so dangerous—for investors who aren’t part of the initial insider crowd anyway.
Consider this post an explanation for why this stock has been on my watch list since September 25, 2009. And why I’m only finally starting to look at buying it now.
A123 went public in September 2009 in a high anticipated offering. Here was a startup out of MIT with technology that would make the company the next big thing in batteries for hybrids and all-electric vehicles. The stock opened for trading at $19.60, already above its offering price, on September 25 and then went on to run up to $25.77 as investors who hadn’t been able to get any shares before the stock went public rushed to get in now. Anybody who owned shares at the first trade price was looking at a 31% gain in a week. And some of those initial investors took their profits. The stock dropped to $14.70 by mid-November on the selling.
But many investors couldn’t sell. The investors who had put money into the company before it went public were required to hold onto their shares for a lock-up period of either 90 or 180 days, depending on exactly what kind of relationship they had with the company before the IPO. With approximately 72 million shares locked-up the stock recovered from that initial round of profit-taking to climb back into the low $20s by the end of December.
It’s been all downhill from there as first the 90-day lockup and then the 180-day lockup expired. (The 90-day would have expired, roughly, on December 25, and the 180-day on March 25.)
The shares closed at $9.63 on May 7. That’s 51% below the $19.60 of that first post-IPO day.
