ZEUSPAUL: No; that is a real risk. For example, Ballard Power, even after the recent wild round trip in its stock, still has a market cap of over $1 billion, and has $100 million or so in the bank from its deal with Daimler Benz. Whatever it may be telling its shareholders, it must realize that ERC's molten carbonate technology is far better for the huge stationary power market than its own PEM type.
Furthermore, DB owns 10% of ERC as well as 25% of BLDPF, and has invested heavily in its own stationary power fuel cells as a licensee of ERC. If things go well with its efforts, it could owe ERC millions of dollars of royalties yearly once it starts selling its units.
Since ERC will still be taking government money for the next couple years DB might not want to buy ERC out directly, but having its puppet BLDPF do it might be looked upon more favorably by DOE officials.
Similarly, if GLW succeeds in its commercialization plans with ERC's nickel zinc battery technology, it will also owe ERC many millions of dollars per year in royalties. Just as with DB, it might be cheaper to buy ERC out than pay the royalties. So that is another candidate.
Given that I am long a lot of ERC you would think I would be happy with a $25 or $30 buyout, but I wouldn't be. The earnings potential from either fuel cells or batteries (amplified by the tiny number of shares outstanding) could have the stock in triple digits in three years. If both technologies succeed (and I think the odds are at least as good as that facing Ballard) then ERC's stock goes way, way, way into triple digits. You don't get too many stocks like that in your lifetime, so I want to hang around for the chance. |
