The Trouble With Hydrogen
TECHNOLOGY TRADER
By BILL ALPERT
Barrons 4/12/04
AS THE PRICE OF OIL HAS SPIKED above $35 a barrel, investors have been cruising for alternative-energy plays. Alternatives that weren't economic with $25 oil might become competitive with $35 oil, these investors reason.
One stock popular among such green investors has been Quantum Fuel Systems Technologies Worldwide. In the past 12 months, Quantum's shares have roared from just a few dollars to 8.
The Irvine, Calif.-based Quantum sells lightweight fuel tanks and fuel lines for vehicles that burn natural gas or hydrogen. Its tanks also hook up to fuel cells, a still-developing technology that works like a hydrogen-powered battery. Quantum's tanks apparently are top notch, and its biggest customer is General Motors. GM's loyalty is also inspired by the 20% of Quantum stock that GM got when the little firm was spun off from tank-maker Impco Technologies in 2002.
But the business from GM and other customers didn't enable Quantum to turn a net profit on its $19 million in revenues for the nine months ended January. Quantum blames GM's low production volumes. Americans don't seem troubled enough about gas prices to stop buying gas-guzzling SUVs. But there's a more direct problem with the reasoning of folks who invest in hydrogen plays like Quantum just because the price of oil is rising: These days, most hydrogen is made from oil. So as oil gets more expensive, hydrogen does, too.
Bracing for Earnings: The Nasdaq Composite index eased 0.2% for the week, with investors growing cautious about upcoming earnings reports for the first quarter. An upbeat report from Yahoo! helped soothe the market.
Bolt from the Blue
Terrorists, beware the death ray. At the end of March, a company called Ionatron emerged from secrecy to announce a weapon that shoots lightning bolts. In a conference call, founder Thomas Dearmin said that Ionatron's weapon can direct lethal electric charges through the air, along the conductive path created by a laser beam. It has worked in a lab, and it's small enough to drive around on a Hum-Vee.
But that's about all Dearmin would say about the weapon, to the annoyance of some investors on the conference call. Dearmin said he wanted to tell more, but national security forbids him. Wait...he did reveal the acronym for the technology. It is "LIPC," for Laser Induced Plasma Channel. National security did not prevent Dearmin from disclosing that his military advisers forecast that the LIPC market will eventually reach $100 billion. Already, there's a $3.4 million line-item in this year's defense budget for Ionatron's LIPC development.
On Feb. 25 Ionatron announced plans to merge with the shell of a public company that had sold natural fertilizers and insecticides. Shares in that shell company, U.S. Home & Garden, shot from under a dollar to over 8 bucks. At a recent 8, the merged firm (whose name is expected to be changed to Ionatron) has a market value of nearly $600 million.
Ionatron describes itself as the vision of Dearmin and his co-founder, Robert Howard. Investors with long memories may remember Howard's previous stock promotion, Presstek. In 1997, the Securities & Exchange Commission charged Howard with kiting Presstek stock -- to a height of $200 a share -- with false statements and stock-analyst reports that he secretly co-authored. Howard settled the charges, without admitting to them, for $2.7 million.
Come to think of it, maybe investors should beware of this death ray, too. |
