Roger: Here is one you and the folks on this thread might find interesting--a company with a market cap of over $1.3 billion, never made a nickel, with little chance of any noticeable black ink for at least ten years. The company is Ballard Power (BLDPF on NASDAQ--BLD in Toronto--US$59--23,205,000 shares outstanding, plus warrants and options).
BLDPF is the leader in developing something called proton exchange membrane ("PEM") fuel cells. A fuel cell is a device that generates electricity by a chemical means, like a battery, without having to burn any hydrocarbons. The major difference between a fuel cell and a battery is that the latter starts out with a certain amount of fuel, generates its electricity, then must be recharged or thrown out, while a fuel cell can be fed fuel continuously.
Compared to conventional ways of generating power fuel cells are very efficient and extremely clean in terms of emissions. Unfortunately, they are still extremely expensive and don't yet pay their way in any application.
The PEM type of fuel cell that is Ballard's specialty can be made very small, and thus has attracted the attention of auto makers as a possible technology to replace internal combustion engines. Daimler Benz has put some money into Ballard, formed a joint venture with it, and, if a great many technological breakthroughs occur on schedule, hopes to introduce a fuel cell powered car in the year 2004. It also expects to lose money on fuel cell cars for several years at least, so you probably won't see any great profits in BLDPF until maybe 2007 at the earliest. Here is a link to a primer on fuel cells I recently did on the BLDPF thread: Message 2429204
BLDPF has some chances of getting its power plant on buses before then, but that is a small market. It claims that it can penetrate the stationary (utility type) power market, but Ballard's PEM type fuel cells have such major disadvantages compared to other types of fuel cells for that purpose, that I think its chances of success are zero. Here's where I explain this point in more detail: Message 2605074
BLDPF has more than doubled since the spring due to the Daimler Benz investment, puff pieces in Wired magazine, the NY Times and The Economist, and publicity about how some day fuel cell cars may help combat global warming.
There is no question that fuel cells are an exciting technology, and I happen to be long the technology leader of a different type of fuel cell (molten carbonate), Energy Research Corp. (ERC--$12.75--4,200,000 shares outstanding) which I think is a much better company than BLDPF, at one twenty fifth the market cap.
There is an excellent chance that Daimler may abandon this fuel cell project along the way. Costs have to come down by a monstrous amount before the technology is viable. Also, PEM fuel cells need pure hydrogen to run, so either the world's infrastructure must change to accommodate the company (not likely), or each car must carry around a small chemical plant to convert gasoline or methanol to hydrogen. In the meantime, Toyota has just introduced a gas/electric hybrid car that gets 66 mpg and is extremely clean in terms of emissions, doing today with that technology a good chunk of what Daimler hopes fuel cells might do seven years from now.
I don't think the $1.3 billion market cap takes into account the substantial risk that the technology may never see light of day, nor the risk that there might be a bear market between now and 2007 and people might not want stocks with never ending large losses. |
