A123 Systems - AONE

H

Hook N. Sinker

A123 Systems, Inc. stock symbol AONE

I usually have no interest in new or newer issues but I notice AONE is about 6 % owned by General Electric Capital Corporation according to http://finance.yahoo.com/q/mh?s=AONE.

http://finance.yahoo.com/q/pr?s=AONE "A123 Systems, Inc. designs, develops, manufactures, and sells rechargeable lithium-ion batteries and battery systems."

I do not find A123 financial statements on yahoo.com or http://ir.a123systems.com/releases.cfm?ReleasesType=&Year=. Yahoo reports that A123 has 1696 employees. I think 1696 is a substantial number of employees, much more than I expect of a start up company. Maybe A123 is not a start up company.

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I do not find A123 financial statements on yahoo.com or http://ir.a123systems.com/releases.cfm?ReleasesType=&Year=. Yahoo reports that A123 has 1696 employees. I think 1696 is a substantial number of employees, much more than I expect of a start up company. Maybe A123 is not a start up company.
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They are absolutely a start up. And the deceptive part of the number of employees is this: "Of our employees, 323 are located in the United States and 1,349 are abroad." from their prospectus.

Despite being around for 8 years, they've posted consistently large losses, even on revenues. They face stiff competition in an auto industry that has already partnered significantly with battery makers who have proven technology, established manufacturing, and positive cash flow. A123 has a partnership with Chrysler. And I think most people would agree that Chrysler is the dog of the auto makers. They were snubbed by GM after analysis and negotiation. I suspect this is for fear of delays in manufacturing and cost-effectiveness, though a reason was not officially given.

I find their jump to be scary for the market, not healthy. We are at a precarious point in our economy as the sentiment is shifting downward on economic data, not upward. This is not a time for speculation.

At their current price, they have a Market Cap at $2.5B and that cannot be sustained for any start up who has yet to prove themselves by turning a profit. And if it somehow were to sustain, I would be ready to call out people for the same kind of risks that came to a head this time last year. It's the same poison in a different cup. You would think people would have learned a lesson.

Here is their prospectus:
http://ir.a123systems.com/secfiling.cfm?filingID=1047469-09-8512
 
For information A123 supplies LiFePO4 batteries to Black and Decker that are in the Dewalt power tool line. The A123 LiFePO4 "Dewalt" cells have extremely high, if not the highest safe peak discharge current rating for that Li chemistry in that size (26650 size cell, 26mm diameter, 650mm long).
 
Nobody investing in this stock particularly cares about the power tools division of the company.

Also, their batteries only come with a 1-5 year warranty, per their prospectus. This does not speak well to their longevity for applications in automobiles. A battery replacement will dwarf the cost of engine or transmission overhaul.
 
I hit the ipo @ $17.78 and steped out @ $24.00. I do like the company and the sector. I have used thier products for my RC EDF jets. Reliabilty wise they are top notch. They will most likely be a takeover canidate in the future. Battery technology will be the dominant power source in the next couple of decades so who knows who will be the players in the game at that point in time.

Akuma
 
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