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Technology Stocks : SatCon Technology (SATC) -- Ignore unavailable to you. Want to Upgrade?

To: Jim Oravetz who wrote (408)	9/12/2003 12:25:51 PM
From: Jim Oravetz	Read Replies (1) \| Respond to of 440

SMARTMONEY.COM: One-Day Wonder: Power Surge By LAWRENCE CARREL Of SMARTMONEY.COM MOTEL 6 ISN'T the only company that promises to leave the light on for you. SatCon Technology's (SATC) shares surged 22% to a new 52-week high of $2.24 on Thursday after the maker of uninterruptible power supply, or UPS, systems was cleared to market one of its key products to the federal government. Backup systems like the company's Rotary UPS are designed to keep mission-critical networks running during power outages. SatCon's stock has sizzled almost 400% higher since the Aug. 14 blackout that darkened a big chunk of North America. The decision by the General Services Administration, which oversees government procurement, to allow SatCon to sell its Rotary UPS to federal agencies opens up a huge market. But here's the catch: While the turn of events has the potential to be a windfall for the Cambridge, Mass., company, SatCon hasn't announced any actual revenue-producing contracts with the feds. "Although it's not a specific order, it's a big deal," says Bill O'Donnell, SatCon's director of communications. "Now, anyone in the federal government can pick up the phone and order it through the GSA list, which makes it easier to sell to the government." SatCon already sells other products to the government. UPS systems are part generator, part energy-storing flywheel. In the event of a brief disruption in electrical flow, the system pulls stored power from a spinning flywheel so devices connected to the system continue to operate seamlessly. If the power doesn't come back after a few seconds, then the backup generator kicks in. The units, which are employed by facilities such as hospitals, airports and military bases that can't afford to lose power, can range in price from several hundred thousand dollars to more than $2 million. A few new sales would be welcome. SatCon saw its net loss for the June quarter widen 33% to $6.7 million, or 36 cents a share, from a year earlier, as revenues plunged 46% to $6.4 million. On a positive note, on Tuesday the company reported a significant increase in order backlog at the end of the June quarter -- $22 million, with $17 million expected to be shipped in the next 12 months. That's a sharp increase over the $16 million backlog with $13 million shippable in the coming 12 months when its fiscal year ended last September. SatCon said the backlog included contracts for military and commercial power-control systems. Looking ahead in light of the August blackout and the government approval, SatCon chose to be cautious. "We've had inquiries since the blackout," says O'Donnell, "and we're in the process of commissioning a unit in Canada. I think people are waiting to see how it works before they commit to buying one. But there has been a lot of interest. We're trying to get to cash-flow neutral in the December quarter. That's the only revenue projection we have." In a separate announcement Thursday, SatCon said it completed the sale of $762,500 of secured convertible subordinated debentures as part of a financing agreement. That deal, from Feb. 18, gave it a total of $4 million, which was necessary for SatCon to meet the expectations of its senior lender. The deal included about $3.2 million of equity financing and $800,000 of secured convertible subordinated debentures. Net of transaction costs, the company received $731,000. And not a moment too soon, considering it had only $1.1 million in cash at the end of the June quarter. Quote: "It's not an order, so I have tempered enthusiasm," says David Kurzman, an analyst at H.C. Wainwright & Co in New York. "Given that this is a company that has struggled to sell its large backup power systems and is competing against a number of established competitors [such as Caterpillar (CAT)], it's hard to speculate that there will be a sale. It does bode well for the company from the perspective that at least they are positioned for it, but I wouldn't speculate that there is an order. The convertible debenture gives them more flexibility, but the company has yet to prove to the marketplace that it has a sustainable business model that can generate cash." (Kurzman doesn't own shares of SatCon; H.C. Wainwright doesn't have an investment-banking relationship with the company.) -For more information and analysis of companies and mutual funds, visit SmartMoney.com at smartmoney.com