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No. of Recommendations: 8
I posted my CC impressions on l'union board:

I listened to this call last night and was well impressed by the potential for this company. My analysis is that we are a few quarters away from rapidly accelerating growth as there are some important pieces of the value chains for some of their potential products still under development. However, they seem well on their way.

One interesting tidbit from CC is that the US Energy Secretary recently described the US as a superpower with the power grid of a third-world country. While I can say from experience that this is a slight exxageration, this statement validates for me the extent of the opportunity in front of AMSC.

It looks to me like they are furthest along in storage systems (SMES) where they have a fabulous alliance with GE to build, co-brand, and market these systems. Their current capacity is 2 systems per month, but they'll be growing to 4 within 6 months and 15 by the end of calendar 2001. Very interesting aspects of the GE alliance is that AMSC gets a percentage of GE gear, like transformers and switches, installed with the SMES systems. GE must also deliver a certain amount of business to AMSC over the next three years in order to retain their exclusivity over the latest D-SMES system. GE benefits by supplying the electric gear in the systems. It seems to me that this is a more intricate partnership than is common in the tech world.

They got 12 orders for SMES systems last year, more than the 10 orders they had received previously since the company's inception. This product line, with the help of the GE alliance, appears to definitely be entering its commercial stage.

The rest of the product line appears further behind from full-scale commercialization. High-temperature superconducting wire is beginning to take hold with the New York and Chicago power outages, caused by overloaded wires under the streets of those cities. Here, the company is embarking on a major capacity increase (10,000 kilometers of wire), ready by beginning of calendar 2002. Commercial revenues still a bit into the future, but CEO termed 10,000 km as a drop in the bucket compared with the demand for HTS wire expected during the second half of this decade.

Also in early stage is HTS usage in motors and power generators. Trying to set up a joint venture with a motor OEM and expect major announcements during the next year on this front.

Company claims a substantial portfolio of patents and trade secrets, primarily related to the power electronics within their systems, that gives them a substantial proprietary advantage.

All in all, I think this is a substantial opportunity for those that buy into the power paradigm, though I do think the investment will require some amount of "paytience." For what is worth, I think a good opportunity also exists in the application of HTS in wireless base stations. The companies there are SCON and CDTS, though they are smaller AND much less well-funded than AMSC. With the coming of wireless data, however, improved capacity and reliability of cell stations is, in my view, imperative, and I don't think any other technology exists to deal with these issues at a reasonable cost. With more than 1 million base stations expected by 2003, the addressable market for HTS wireless filters, at $20,000 a pop, is reasonably large, provided these companies can generate the manufacturing capacity.


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