Wednesday, May 12, 2010

A-123 almost a 10

Yeah some optimistic CNN viewer who believes their news may believe A-123 is a 10. The only thing 10 about them will be the 10 count for a knockout in a few more rounds. AONE (NASDAQ) reported their first quarter 2010 results today. Product revenues were down slightly from the fourth quarter of 2009 ($19,774,000 versus $19,900,000). Their cost of goods sold were up slightly from the fourth quarter of 2009 ($22,354,000 versus $22,022,000). These guys claim they are in a growth business. Growth business my hat! The volume of product sold expressed in watt hours of battery capacity dropped from 21,700,000 in the fourth quarter of 2009 to only 16,300,000. The spin meisters will find some way to interpret the precipitous drop in volume as a minor aberration in the long term growth for this newly publically traded wonder company. Well my third grade teacher taught me how to calculate the unit selling price and the unit cost price for items. The unit cost of producing a battery increased from $1,015 per kilowatt hour to $1,371 per kilowatt hour. The entire basis for the viability of lithium ion batteries is that there will be the rapid learning rate. Well so far A-123 has the learning rate of a patient suffering from a severe case of Alzheimer’s. Their unit costs of production are increasing not decreasing. At this cost of goods the batteries in a Tesla roadster will equal $74,000.

A-123 lost almost thirty million dollars in the quarter and at this rate of loss making they have about fifteen quarter worth of cash before they go flat like a never-ready battery. In the coming months a few more thermodynamically kaput companies will have their IPOs (initial public offerings). I urge my readers to avoid these stocks like the plague. Those who bought AONE last year when I warned against buying them have lost a pile of DPs (dead presidents). Also as predicted the US Senate session yesterday with BP, Transocean, and Halliburton was a three ring circus of pointing fingers. I promised my readers I will not blog on BP but the news tonight stated that the blow-out preventer on the leaking well had a dead battery. I wonder if this dead battery was provided to Bayou Polluter by a mistake source company. No negative opinions on A1 Steak Sauce manufactured by Kraft Foods. Kraft is not asking the government for billions of dollars to subsidize their business. Soon we will have another start up lithium battery company called Blow-out Valve Eater.