David you're right about the Hindenburg but it does not mean than Ballard shares are a buy. This was in the Toronto Globe and Mail on 11th Jan and no-one posted it. Ballard fans won't like it.
Ingram: Buying Ballard is an act of faith
By BY MATHEW INGRAM
Globe and Mail Update
Friday, January 11, 2002 - Online edition, Posted at 4:34 PM
When word leaked out that the U.S. government was going to announce a major funding program for fuel-cell technology, most of the players in that sector saw their shares spike upwards - including the great-granddaddy of fuel-cell companies, Ballard Power of Burnaby, B.C., whose stock climbed by more than 10 per cent. No surprise there, right? If you believe in fuel cells, then Ballard must be the one to buy. Unfortunately, that's exactly the point: buying shares in Ballard is largely a leap of faith.
That's not to say Ballard is some kind of scam, mind you, or that its fuel cell technology will never work. No one would deny that the company is a leader in the field of proton exchange membrane (PEM) fuel-cells, and there is plenty of evidence that such cells - which are powered by hydrogen - not only work well, but can be used to make automobiles cleaner, quieter and more efficient. However, there are also plenty of reasons to believe that they won't be doing so in any volume for a decade or so.
Even Ballard executives agree it will take several more years - at least - before fuel cells are even available in consumer-level automobiles, as opposed to the bus trials that have been going on in several North American cities over the past few years. For some time after that, they will be substantially more expensive than conventional cars, and that will likely delay their rollout even further, as it has with hybrid electric vehicles. It could be 2010 or later before fuel cell cars are widely used.
Not that long ago, investors were content to pay $150 a share for a whole range of Internet-based companies with little or nothing in the way of real profits - or revenues, in some extreme cases - on the assumption that at some point in the future they would be able to make money from their technology or service. Now, that seems like a kind of mass delusion investors fell into. But is Ballard so different? Not really.
In fact, the Internet plays a far bigger role in the world of business and society in general than fuel cells will for some time. Companies such as Dell and Cisco use the Internet to sell billions of dollars a day worth of products, and save millions doing so. Fuel cells will cost more than the technology they are meant to replace, although the argument is that the benefits (largely environmental) will outweigh those costs.
Even Research in Motion, which has what many feel is an overvalued stock - it trades for six times revenues, almost as much as Cisco - at least has products that people use every day. Ballard is barely out of the lab, and its shares trade at 50 times revenues, giving it a market value of $3-billion. The applications of its technology that are close to market don't even have anything to do with cars: they are a Coleman-brand generator for camping and a larger version designed to power homes.
The biggest hurdle for Ballard or the PEM fuel cell industry in general is not the actual cell itself - the B.C.-based company has managed to make the cells small enough and powerful enough to use in automobiles and many other applications. In some ways, that's the easy part. The hard part is to make it easy for consumers to use them, and that means providing the hydrogen that powers the cell - which has to be either created through the expensive process of electrolysis or produced from natural gas or methanol. You can't go to the gas station and ask for some hydrogen. |
