Smart grid networking company Ambient Corp. may not be around much longer to keep its one key customer, Duke Energy, supplied with the firm's one key product, digital grid nodes.
Last week, the Newton, Mass.-based company announced it had hired a financial advisor to help it find “strategic alternatives to maximize value for the company's stakeholders, including, but not limited to, a sale of the company."
In August, Ambient reported it had lost $8.4 million in the first six months of 2013, as revenue fell to $7 million, down 70 percent from $23.2 million in the same period in 2012. The company hasn’t reported a profit since 2011, and as of June 30, it had only $6.5 million in cash and cash equivalents on hand, down from $13.3 million at the end of 2012.
All this bad news can be traced to two sources. First, Ambient hasn’t been able to add big new customers for its grid control nodes, some 138,000 of which have been deployed to date. Second, its chief customer, Charlotte, N.C.-based utility Duke Energy, has completed its one big deployment of about 100,000 Ambient nodes in Ohio -- and the growth and subsequent completion of that project have closely matched Ambient’s once-rising, and now faltering, fortunes.
While Duke is also using about 3,000 Ambient nodes in its smart grid pilot project in Charlotte, it hasn’t started any big new deployments in its Indiana, Kentucky and Carolinas service territories, whether with Ambient or other smart meter technology providers.
In the meantime, Duke has also been working with Cisco and Alcatel-Lucent on its smart grid plans, leaving it with other options if it chooses to keep multi-communications capable grid nodes at the center of its smart metering and distribution automation plans.
Ambient does have other technologies on offer, including power quality monitoring technology it has piloted in the U.K. In June, it launched a project with Consolidated Edison to link legacy commercial and industrial meters to the New York utility's new smart grid networks. But those projects have clearly failed to provide the company the revenues it needed to make up for its inability to grow its node business.
It’s hard to predict what might happen to Ambient’s technology at this point. John Joyce, CEO and chairman, said in last week’s release that the company’s “differentiated hardware and software solutions are valuable assets that have significant long-term potential.” But it’s less clear how the company’s mix of technologies might find a place outside its existing deployments.
Indeed, Ambient’s current offerings are already a departure from its original business. The company was founded in 2002 as a would-be provider of broadband-over-powerline (BPL) technology, only to switch its focus when it became clear that utilities weren’t going to be able to compete with telcos and cable providers by using their power lines as broadband pipes.
Other former BPL providers have also diversified their technology mix, only to find themselves bought by other smart grid players. Current Group sold its grid optimization unit to S&C Electric in 2011, and was acquired outright in March by Ormazabal, a Spanish medium-voltage grid gear vendor with an interest in Current’s PRIME telecommunications protocol being used by Iberdrola in its smart meter deployments in Spain.
Likewise, BPL Global ditched its namesake technology to acquire companies that gave it a portfolio including transformer monitoring, demand response and substation automation technologies. In August, BPL was acquired by Qualitrol, a provider of transformer monitoring solutions, leaving an unclear future for its other technology lines and partners.
Duke Energy's CTO explains the value of Ambient's communications node: