The positive press for DCHT continues,
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Engineers follow their noses
By Ben Sullivan, Daily News Staff Writer
VALENCIA -- Five years ago, over frankfurters and beer at a hot
dog stand on Ventura Boulevard, aerospace consultants David
Haberman and David Walker decided to take a chance.
The pair had learned of a technology developed at Sandia National
Laboratory in New Mexico and available for commercialization that
used an air-sniffing computer chip to detect hydrogen gas.
Believing hydrogen would play a growing role in industry, and that
existing sensors were too expensive and bulky to keep pace,
Walker and Haberman created DCH Technology Inc. to bring the
technology to market.
The rest, as they say, is history.
Well, not quite. After five years, the Valencia-based company's
three standard-bearer products are starting to gain acceptance. But
so far, DCH has generated little in the way of sales, with 1998
revenues of $215,000 and a net loss of more than $4 million. The
company's stock, which peaked as high $8.25 following its initial
public offering in 1996, closed Friday at $1.
Still, Walker and Haberman say they are confident of the firm's
prospects. "We have no debt, the founders remain in control of the
company and our products are quite good," said Haberman, DCH's
chairman and vice president of planning.
At least a few others agree. James Stock's Stock Tips, a Las
Vegas-based investor newsletter, declared the company was
"farther along than they've ever been to meeting their corporate
goals" and said it may be one of the market's best-kept secrets.
At the heart of the DCH game plan is the sensor chip itself.
Developed at Sandia, a U.S. Department of Energy research lab, it
consists of a thin layer of palladium nickel alloy sandwiched on top
of an integrated circuit. When it comes into contact with hydrogen
atoms, even at minute levels, the alloy spits protons directly into the
integrated circuit's logic cells.
Using that same basic technology, DCH has developed a hand-held
device for hunting down leaks, a model for installation on
hydrogen-powered devices, and a version for use in permanent
locales where hydrogen might seep out, such as at a nuclear power
plant or waste-treatment center. Together, the three applications
have a potential market of $200 million, the company estimates.
By outsourcing the manufacturing of the sensors to industrial giant
Allied Signal, DCH has managed to keep its staff and capital
investments down. The company's staff of 11 consists primarily of
engineers working to refine the sensor and develop new
applications.
Haberman and Walker, meanwhile, have been working to
establishing relationships with a bevy of blue chip names they hope
will result in 1999 sales of between $3 million and $4 million. A
DCH sensor flew aboard a NASA space shuttle mission last year to
test the device's extraterrestrial applications. Westinghouse recently
certified the technology for use at a Russian nuclear power plant it is
retrofitting. And Northrup Grumman Corp. is using DCH products in
its metallurgy division. Other customers include Ford Motor Co.,
Lockheed Martin Defense Systems and the U.S. Naval Medical
Research Institute.
Still, the fact remains that demand for hydrogen sensors of any sort
is limited. While the element is a key ingredient in the fuel cells that
environmentalists believe will one day power cars, hydrogen sensor
sales currently total in the thousands worldwide, not millions. But if
just two or three companies opted to include DCH devices on a
broad basis -- say, in every fuel-cell car Ford produces -- it would
mean a windfall for the company, Haberman said.
With increased sniffing of DCH by investors and customers alike,
Haberman said things look positive. "We've been distinctly poor at
communications . . . but the neat part is the phone keeps ringing"
from potential customers, he said. "It just seems like everything's
clicking and coming together."
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