A123, From Hot to Not (AONE)

A123 Systems, Inc. (NASDAQ: AONE) was supposed to be a hot IPO in the hot sector of lithium-ion batteries and systems.  Unfortunately, the earnings reaction isn’t so hot.  The revenue growth did not allow this one to beat earnings expectations.  Can it be that the sector is already full of too many players?

A123 said that the net loss attributable to common stockholders was -$34.2 million, or -$0.33 EPS.  The loss looks exceptionally narrower because of a share count difference.  The reality is that the loss is wider than a year ago at -$21.9 million even though the loss came to -$2.36 a year ago.  This last quarter is based on 104.3 million weighted average common shares outstanding versus 9.3 million weighted average common shares outstanding a year ago.

Total revenue was $22.6 million versus $19.7 million a year ago.  Product revenue was $15.6 million, compared to $16.5 million a year ago; services revenue was $7.1 million, up from $3.2 million a year ago.

Thomson Reuters had estimates at -$0.27 EPS and $25.46 million in revenues.  Despite the growth, A123 was a disappointment no matter how you cut it.

The company noted that its cash and cash equivalents were $353 million as of June 30, 2010, down from $411 million at March 31, 2010. The large contraction was based upon growth of its worldwide manufacturing capacity.

Shares closed down 3.87% at $10.44 in regular trading today.  The company sold 28.1 million shares at $13.50 per share to raise some $378 million back in September 2009.  The stock has been a busted IPO, trading under $13.50, since March 30.

No formal guidance was given by the company.  A123 said the combination of its business mix positions the company for accelerated revenue growth and improving profitability margins in 2011.  Traders in the after-hours session are saying “Tell it to the hand!” as shares are trading down another 4.8% at $9.95 in the after-hours session.  The 52-week trading range is $7.50 to $28.20.

JON C. OGG