A.J.: No one follows them, in the sense of putting out any reports. There was some minimal coverage from Adams, Harkness and Hill but that seems to have ended. Unlike Ballard, ERC (its symbol since moving to the ASE several months ago) has never lost a dime, so that makes it a lousy corporate finance customer. (No losses = no need for regular stock offerings or other deals.) Most brokerages need an existing corporate finance relationship, or good prospects of one, before bothering to cover a stock.
When ERC first went public five years ago the prospectus said that it put up a fully automated production facility the company would eventually need $100,000,000 but that figure has dropped each year as the company has improved its design. In the last 10-K it is listed at $16,000,000 if I recall properly, but I am told that the real figure in three years (when if all goes well it will be needed) will be far less than that. So again, no need for cash = no Wall St. coverage.
Santa Clara did have problems, but it wasn't the fuel cells themselves that were trouble, it was some bad glue (!) used to attach the external insulation that carbonized, causing a short circuit, etc. Before that problem kicked in the facility was the most efficient producer of electricity on earth.
ERC's new design is substantially smaller, more powerful, and, most important - cheaper. ERC expects, if all goes well, to be producing them in 3 years at a cost of about $1200 per kW. If that happens, that would enable it tap into a market that, at a selling price in the $2000 per kW range, could be in the billion range, or at least some number that is fairly large relative to its current $45,000,000 market cap.
Ballard needs to produce fuel cells in the few hundred dollars per kW range to compete with today's internal combustion engines, not to mention those of eight years from now. That is one reason why I like ERC better.
In addition, ERC gives you two chances at bat. Corning Glass is putting some serious effort into its commercialization of ERC's battery design. If GLW turns this into a product with sales in the hundreds of millions per year, as it intends, then royalties to ERC will be huge. |
