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No. of Recommendations: 5
BLDP - Hairy Knuckles?

The answer, I think, has to be no. The fuel cell arena appears to be poised for a royalty game, not a gorilla game. And it is pre-commercial so it is premature to call it either, really.

Ballard is extremely well positioned with a wide array of PEM fuel cell products in the prototype stages. They also have potentially large businesses in electric drivetrains and other fuel cell related equipment. However their first fuel cell product, a small portable generator hasn't reached the retail market yet.

I say that the fuel cell arena will be a royalty game because it doesn't appear there will be 'open proprietary standards' which would lock people into using one or another fuel cell. Niether does Ballard have a lock on IP necessary to build competitive fuel cells. They are well positioned, but will face fierce competition.

Since fuel cells are pre-commercial, the door is still wide open for a challenger to come up with a better way of building them and quickly eliminate Ballards current competitive advantage. Improved membranes allowing higher temperature operation of PEMs are under investigation and competitors could have an edge there though Ballard as the leader could have less incentive to publicize advances.

I like Ballard and have owned the stock. I got out with a slight profit before the crash when I decided that its then $8 billion market cap was unsustainable given market conditions, and prospects for losses for years. It is still very richly priced and many many things will have to go right for it to live up to its current $3 billion market cap. That was a nice breakout the last couple of days, unfortunately I'd say it's right back at resistance from March-April, July 2001, which it may have trouble shooting through.

Ben
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