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Hi fellow AMSC investors,

I said I would try to keep the board up to date on articles, etc., and then I abandoned my post (no pun intended). I can explain, though. For the past four weeks I have been a leader of a team of over 250 investors (not counting lurkers) for The Motley Fool Rule Maker Seminar. That has taken my time day and night. I did, however, take time out today to listen to the recent American Superconductor Conference Call in response to their latest report. I'm posting my recap here because some of you may not have heard the Conference Call, and you will not be able to access it after today. Here, for what it is worth, is my take on it.

Recap of Report

As usual, Yurek was positive, articulate, confident and motivated, without being arrogant or aloof. He knows and believes in American Superconductor and every aspect of the company's business, research and development. Yes, I was extremely impressed with his knowledge and his dedication to his vision.

Stan Piekos, VP for Corp. Development, gave a brief review of the numbers in the published report, just released, and explained losses and increased costs satisfactorily. The fact that the delivery of the 6 D-SMES units to Wisconsin Public Service will not show up in the report until 2002 makes a huge difference in interpreting cost and sales. The missed target of 30 SMES units last year was not rolled into this year. But in answer to a question from a representative of HC Wainwright, the break-even target for HTS was set at the point of full scale production of the HTS plant in March of 2002.

WPS Installation on Target

I've been watching the progress of the Wisconsin Public Service installation since I first found out about it last year. I read and studied the diagrams in "Grid Voltage Support" by Larry Borgard of Wisconsin Public Service Corp. ( ), published in October of 1999, announcing the purchase from American Superconductor of 6 SMES or D-SMES units with target installation the summer of 2000. As Yurek said, with completion of the project just announced, they are definitely on track and on target.

This Conference Call is the first time I've heard real numbers to show the savings of installing D-SMES units. The in-depth study by American Superconductor in conjunction with WPS showed that in addition to stabilizing the system enough to allow it to work at near capacity (meaning approximately 15% more power can pass through the grid), the savings to WPS in money and time would be substantial. Purchase and installation of the 6 D-SMES units in their power grid represents a savings to WPS of more than $7 Million over the other 2 alternatives (double circuiting and larger capacitors) and cuts the lead time from 2-3 years for the alternative solutions to only a few months for the D-SMES units. Since this is the first time D-SMES has operated in a grid on a commercial basis, you can be sure other potential clients will be watching to see if that support does in fact protect against brownouts and allow 15% increased power flow, as claimed. Success here guarantees increased orders and more clients.

Power Electronic Converters

A 2-part question came from a Bank of America representative concerning data centers activity and power electronics. Yurek explained that they are currently putting together quotes for clients going off the grid who still need to access the grid as back up. The importance of the acquisition of Integrated Electronics was emphasized as key to success in this area because of their strategic access to the latest advances and developments of power electronics. While no names were given, it was stated that product is being shipped and American Superconductor is in "direct discussion" with large power producers.

Because of the increasing activity level of data centers, Yurek sees the real opportunity as the new sites being built for internet business exchanges. He explained that in the power tech arena, all of these data campuses (several buildings) need power electronic converters, and American Superconductor is currently developing a business plan to meet that ever-increasing need. That market for power electronic converters to condition and control power was estimated at a minimum of $1 Billion. He called it the "leading force in the power technology sector".

Rockwell Initiative

Roland Lefebvre, Executive VP, fielded a question about large (1000-5000 hp) motors. He said that American Superconductor's "smaller footprint" motor meant a cost reduction in the 1000 hp motor or 25-40% and weight reduction of about 50%. The larger motor (5000 hp) for the Navy, is only 20% of the weight. He explained that American Superconductor would use that profitability to gain market share in the area of industrial and ship propulsion motors and to stimulate growth. He said the first 5000 hp motor would be ready for testing by next Spring.

Production of 2nd Generation HTS Wire

Second generation HTS was discussed in terms of intellectual property. American Superconductor has licenses for key components for the 2nd generation wire architecture from ORNL, MIT and Lucent. They expect it to be in pilot production next year. Yurek explained that American Superconductor's mantra has been that whatever wire technology they chose to pursue, it had to mean high volume, low cost manufacturing of the wire. To that end, the second generation HTS wire should broaden the market dramatically.

Confidence and Diversity

Other subjects and projects were discussed, including the project with Pirelli for Detroit Substation and the application of products for transportation industries, as well as aerospace and the military. The ease with which responses to questions were given and the confidence and knowlege of the company execs who replied confirmed my belief that American Superconductor has a bright future indeed, and that its sustainable advantage will reward long-term investors exponentially.

As a shareholder with a sizable AMSC position, I was impressed with the presentation and the ready answers to the questions. I'm anxious to find out who these undisclosed clients are, and look forward to following the company's progress as more exciting developments are announced this year and in the coming years. I'm more convinced than ever that when my husband (electronic engineer) bought into this little-known company a couple of years ago because he believed in its product and the expertise and vision of Greg Yurek, he assured us of future financial independence.


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