It was one of the few big breakout IPOs of 2009, and the euphoria surrounding advanced battery maker A123 Systems (AONE) resonated throughout Wall Street. But now that the IPO party has long since settled, the company is starting to face the reality that its quarterly numbers are what really matter. Well, on Tuesday A123 reported those numbers for the fourth quarter, and the results were mixed bag.
On the positive front, the company said sales in the quarter ended Dec. 31, rose 3.8% to $24.5 million, ahead of consensus Street estimates for sales of just $20.8 million. But despite the company’s solid sales, actual earnings for the quarter came in at a loss of 22 cents per share, and that metric fell short of Street expectations for a loss of only 20 cents per share.
In a statement accompanying the earnings release, A123 CEO David Vieau said the company’s “momentum is strong entering 2010.” He cited recent new and expanded deals with Fisker Automotive and SAIC Motor in the passenger vehicle lithium ion battery market, and with Navistar International (NAV) to develop batteries for that company’s heavy duty vehicle market. Vieau also cited increased shipments of battery systems to Southern California Edison Company
(SCE) in the fourth quarter as a continued positive heading into 2010.
Judging by the reaction to A123’s shares in Tuesday’s after-hours trade, Wall Street is bullish on the company’s Q4 results. Shares rose about 2% in the session despite the earnings miss.
So, what’s in store for A123 shares going forward? Well, if the company can continue increasing revenue — and reading between the lines of the earnings report and statement certainly suggests they can — then this stock could be a true clean energy winner in the months ahead.
Finally, there is one exogenous reason why A123 may continue profiting, and that’s the tarnished reputation of the auto industry. Over the past year, auto makers and the industry at large have taken some big PR hits in terms of public bailouts, government takeovers and, of course, Toyota (TM) and its safety woes. One thing the industry can do to keep its image positive is to “go green” by expanding its clean-energy technology — and that’s what A123 System’s lithium ion batteries allow the industry to do.