Viewing posts tagged "A123"

A Month Later, A123 Systems Still Rising

If you were wondering if the stock of battery maker A123 Systems would hold up after its successful IPO last month, the answer is good.

The stock closed at $23.89 today. The company went public on September 23 for $13.50 a share. (A123 initially was going to sell its stock in the $8 and $9 range but upped it a couple of times right before the IPO.

On the first day of trading on Sept. 24, it rose to $20.18. 

The company specializes in lithium-ion batteries for power tools and cars. It has contracts with BAE Systems and Chrysler. But timing helped too. The stock market has been rising and everyone has been antsy for an IPO. Even though the company has never made a profit and has lost $146 million since it began in 2001, investors flocked to it. Revenues have been climbing.

It wanted to go public last year but pulled the IPO amid the financial turmoil.

A123 Explodes in First Day Trading, Near $20 a Share

A123 Systems is zooming in the first day of trading. The company yesterday sold 28.1 million shares for $13.50 each to raise $380 million.

The stock is currently trading at $19.65 and briefly touched 20. Right now, that's a 45 percent gain.

Not bad for a company that's never turned a profit!

The gains are even more remarkable when you consider that it upped its IPO price twice right before trading and increased the number of shares for sale. Right before the IPO, it had anticipated selling 25.7 million shares for between $10 and $11.50 each. Earlier, A123 said the company would likely select a stock price was between $8 and $9.50.

Optimists say that this could be a wellspring for future clean IPOs, but it has skeptics too. The company mostly makes batteries for power tools but has branched into some experiments in smart grid. It will make batteries for the automotive market – for Chrysler. Here's a summary of info from the S-1.

Is it sustainable? It's hard to say. On one hand, we are living through the golden age of batteries. Five years ago, few people cared that much about them. Now, the federal government is lavishing grants on battery makers and utilities and car makers both say they plan to incorporate lithium-ion batteries into their operations and products. A123 is ahead of many of the startups and already ships batteries to customers. The company emerged from MIT in 2001. It also has friends at General Electric and BAE Systems.

On the other hand, a lot of well-established giants in Asia make these already. Can a startup make headway? Plus, we've lived through IPO fever before. Remember Larry Augustin? Probably not. But he was a billionaire on paper for about ten minutes after VA Linux went public.

A123 Raises Price in Anticipation of Imminent IPO

A123 Systems is feeling cocky.

The battery maker, which plans to go public and wants to start trading its shares on Nasdaq tomorrrow, said in its filing with the SEC that it will now sell its shares at a price between $10 and $11.50. Earlier, the planned price was $8 to $9.50. It has not raised the number of shares it will offer: 25.7 million. The final price will come after the market closes today.

That's a sign, of course, that the company is getting a lot of interest from potential buyers. Last year, desalination expert Energy Recovery, one of the few IPOs in green last year,  Then again, other companies – Transmeta, several Linux companies – have gone into IPOs riding a wave of momentum that evaporated.

If A123 succeeds, many investors, entrepreneurs and analysts hope it will pave the way for more IPOs or acquisitions.

It's somewhat of a polarizing company. Many believe it could become a fairly large battery company. The good: It has deals with Black & Decker, BAE Systems and Chrysler. Revenue since founding has come to $168.5 million and losses are declining.

The downside: A123 has never made a profit, has lost $146 million since its founding, and it specializes in lithium phosphate batteries that pack less energy than some of the lithium batteries (or components for lithium batteries) that are here or are coming from companies like Boston-Power, Imara, IBM. But A123 is in volume production.

Is A123 the right company at the right time, or is it already dated? Place your bets, battery fans.

More Smart Grid Stimulus Pitches: Tucson Electric Power and Beacon Power

The smart grid demonstration projects seeking Department of Energy funds just keep coming. The latest include flywheel maker Beacon Power Corp. and Arizona utility Tucson Electric Power.

Beacon said Tuesday it is asking DOE for $47 million to build two 20-megawatt energy storage plants using its flywheels. The money would come from DOE's $615 million smart grid demonstration grant program, the smaller of two programs that contain $3.9 billion to boost smart grid projects (see Green Light post).

The Tyngsboro, Mass.-based company already has landed a $43 million DOE loan guarantee to build one 20-megawatt storage plant at a projected cost of $69 million (see Beacon Power, Nordic Windpower Get $59M DOE Loan Guarantees).

Other utilities seeking DOE grants to build grid energy storage include Pacific Gas & Electric, which plans a compressed air energy storage project, and Southern California Edison, which wants battery maker A123 to build a 32-megawatt lithium-ion battery to help manage wind power (see PG&E Wants DOE Dollars for Underground Air Energy Storage and SoCal Edison Wants A123's Biggest Grid Battery Ever).

As for Tucson Electric Power, both compressed air and lithium-ion battery storage would play a part in its "Bright Tucson" smart grid plan, which also include 1.6 megawatts of solar panels and demand response systems to help its customers turn down their power use during peak demand times.

The utility wants $25 million from DOE's demonstration grant program to do the project, which will include demand response aggregator EnerNoc, home energy management technology provider Tendril and smart meter maker Itron, among other partners.

Kansas City-based construction and engineering firm Burns & McDonnell will build the compressed air energy system and "commission the development of the battery storage system," the utility stated in a press release. It did not say which battery company or companies might be tapped for the project.

The utility also named military contractor Raytheon as a partner to provide security for the project. It's a growing trend, as utilities turn to contractors like Lockheed Martin and Boeing to help them ensure that their smart grid systems will meet security requirements being developed by the federal government and industry bodies (see Green Light post).

How Big an Impact Is Lobbying Having on DOE Grants?

Is the Department of Energy awarding grants on the basis of scientific merit and economic feasibility, or coziness with lawmakers?

Sources have told us that the grant process is pretty rigorous and objective. So far, nothing in the process indicates unseemliness. Still, we won't know the full answer for years. Nonetheless, the Boston Globe combed through OpenSecrets, which tracks lobbyists, and found some fun numbers.

A123 Systems received a $249 million grant from the DOE to help it expand production. OpenSecrets showed that it spent around $1 million in lobbying in the past three years.

Boston-Power did not get its request for $100 million in grant money. It spent about $50,000 in the last two years.

The two companies in many ways are similar. Both make lithium-ion batteries and have attracted tens of millions in investment from VCs and others. Both are also well-connected. A123 very visibly lost a contract to supply batteries to the far more experienced LG Chem. (The chemistry of A123's batteries isn't as energy dense as some others either.) However, it inked a deal with Chrysler. Boston-Power has put its batteries into HP notebooks and wants to get into automotive.

Still, there are differences. Namely, Boston-Power has used a lot of its money to expand factory facilities in Asia. That couldn't have gone over well. (A123 actually makes its batteries in China too, but has been talking about manufacturing in the good ol' USA for a while.) The grants were also mostly targeted at automotive battery makers, which explains why Compact Power (which works with LG Chem) and EnerDel got their grants awarded.

And my own search on the OpenSecrets database shows now sudden burst of lobbying activity by EnerDel, Pyrotek or Novolyte. Saft America, which got $95.5 million, spent $150,000 on lobbying in 2005 and $50,000 in 2009. OpenSecrets cautions that lobbying can occur through trade groups etc.

Nonetheless, lobbying likely helps familiarize a name. EnerG2, a six-year old company that raised $8.5 million last year, spent $40,000 in lobbying in 2009. It got a $21 million grant.

It's an issue worth keeping an eye on.

Boston-Power Loses Out on DOE Grant, Aims for DOD Fund

When President Obama announced today the recipients of the $2.4 billion grants for making electric car components and demonstrating vehicle charging technologies, Boston-Power was conspicuously absent from the list of winners.

The Westborough, Mass., startup held an event featuring Massachusetts Gov. Deval Patrick when it announced the plan in June to apply for a $100 million grant to help build a 455,000-square-foot lithium-ion battery factory nearly its headquarters. The U.S. Department of Energy administers the program.

"We are tremendously disappointed," said Christina Lampe-Onnerud, CEO of Boston-Power. "If we don't get federal funding, we will not be able to bring greentech jobs to the United States."

The company is one of dozens who sought DOE funding. One of the biggest winners is General Motors, which is getting three grants totaling $241.4 million. Johnson Controls, meanwhile, won $299.2 million for its battery factory plan.

The company, founded in 2005, develops lithium-ion batteries for consumer electronics and cars. Boston-Power's first product is a battery pack for laptop computers and won a contract with Hewlett Packard.

The battery developer has been producing its products in Taiwan through a contract with GP Batteries. Boston-Power also started shipping car batteries to customers this year, though the names won't be disclosed until product launches.

The company hasn't given up hopes of building a factory in Massachusetts. It has applied for a $100 million grant from the U.S. Department of Defense, which is likely to announce the recipients in October, Lampe-Onnerud said.

The DOD grant is part of a larger program that is commonly called "Defense Production Act Title III." The battery grant is meant to create a good-size, domestic source of lithium-ion batteries.

Because the funding is coming from the DOD, grant recipients could end up selling batteries not just in the commercial sector but also to the military and other government agencies.

Boston-Power has won a commitment from Massachusetts for up to $9 million to build the factory, but the money is contingent on the company getting federal funding, Lampe-Onnerud said.

The DOD funding could make up as much as half of the costs of setting up the factory, she said. Boston-Power would use it operating capital to make up the difference.

If the company doesn't line up the DOD funding, then it would continue to center its manufacturing in Asia, she added. The company is doubling its production capacity every six months, Lampe-Onnerud said.