Friday, January 2, 2009

A-Power Energy Stinks It Up

A-Power (APWR) posts what has to be one of the worst warnings I've ever seen. They wait until nearly the last day of the Q to issue a release saying that revenue will be 50% less then expected. This from a company that still have a lot of believers thinking they were isolated from issues and might possibly make the Qs numbers. In reality, the reported numbers aren't that bad compared to the stock price, but whats really confounding is the reasoning. What contracts were postponed? And which ones could've generated $80M in revenue by being signed during the last week of the quarter? Potentially some of the wind customers could generate that level of revenue because the power customers couldn't just be counted as revenue until parts of the project are completed.

This stock will be in the penalty box for awhile. They still have a compelling story, but until they do a much better job of handling the Street it'll have a difficult time moving. They do have a good balance sheet and were still profitable so it isn't all bad. Just difficult to trust now.

For the 2008 fourth quarter, the Company now expects revenue to be approximately $76 million and net income to be approximately $5 million. Both revenue and net income guidance are now lower than previous guidance of $158 million and $15.5 million, respectively.
Mr. Jinxiang Lu, A-Power's Chairman and CEO, commented, "Due to the unusual current macro economic conditions, a few of our key potential contracts, which we expected to close in the fourth quarter, were postponed. As our projects are highly capital intensive, we always require a sizeable down payment as a key component of our standard contract. Under today's environment, we believe that it is even more important to exercise prudence on customers' payment terms and to continue to focus on our cash flow management.

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