Brian: Excuse me, where have I knocked D-B? It is a huge company that is involved in thousands of different projects, some of which have worked out, some of which haven't. It has taken $billions in writeoffs on those that haven't, but it is doing the right thing by getting involved in so many that have excellent potential.
And I think it is doing the right thing taking a shot at trying to help Ballard come up with a commercial product. Although we are many years from knowing whether or not it will succeed, the payoff could be big. And it certainly negotiated an excellent deal with Ballard, allowing it to keep most of any potential profits for itself.
Actually, what it is doing with Ballard is just following in the footsteps of what it has been doing with ERC. Some years ago, D-B invested some money in ERC, bought 10% of its stock, and has a rep on ERC's board.
More important, it has taken a license on ERC's technology and has formed a consortium with several other major companies in Europe to commercialize molten carbonate fuel cells for stationary power. It recently unveiled a radical design for a 250 kW molten carbonate unit that, if it works, could address that market at a very low cost. That would be excellent for ERC, in that it D-B would owe it substantial royalties. In addition, D-B would have to negotiate with ERC for the right to sell that unit in parts of the world other than Europe.
Again, the difference is valuation. ERC's market cap is a small fraction of the money the D-B consortium is spending on developing its technology, not to mention the hundreds of millions that have been and will be spent in the US. So with ERC, you are buying R&D at pennies on the dollar, and that R&D will be bringing out products aimed at a multi-billion market in a few years. Ballard's market cap is a huge premium to the R&D money scheduled to be spent over the next eight years before its product sees light of day, and then, if anything does become commercial, D-B keeps most of the profits.
In addition, ERC is very undervalued compared to all other battery companies, so even if fuel cells never bring in a dime the stock has huge potential. |
