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No. of Recommendations: 6
I would consider 2007 'very successful' for AMSC if we are hear a year from now and AMSC has:
- gotten any SuperVAR orders from any other utility;
- if LIPA/Long Island Power Authority agrees to go to phase two of their HTS in-line cable project, going to at least 5000 feet.
- power electronics- including Windtec's - profitable growth continues.
- the Navy pronounces itself happy and totally satisfied with the 36.5m HTS test motor in Philadelphia.


I agree. I would also like to see the company license its wire manufacturing so 1) it could get a large cash infusion and 2) free itself to focus on wire R&D (for third generation wire) and new product introduction. I would welcome licensing for motors as well. With AMSC's limited capital, the company needs to find a way to quickly build and dominate markets. If AMSC takes a "We'll do it ourselves" approach its lack of capital will be an ongoing concern (when it doesn't have to be).

I also agree that Windtec is a key to what happens in calendar year 2007. By itself, Windtec looks to be ready to grow quickly in China and India. Better yet, it puts AMSC in a position to sell PowerModule and D-VAR technologies -- and this the company says should drive sales in this division up by 100%. This is a win-win for AMSC because it is the rapidly growing and profitable Power Electronic Systems business where it expects to have 10% margins in 2007 and, as this division grows, it will provide the cash that will turn down the cash burn rate.

Add to those two things democratic control of the Congress, and things don't look good.

While the Republicans were afraid of the words "alternative energy," the Democrats have embraced them. The presidential election cycle is now starting to gear up and I expect the Democrats to want the green banner in their corner. I see the Democrats as a major plus for alternative energy.

I am convinced the Democrats are at the right place at the right time for alternative energy. Many of these technologies are finally becoming cost effective. Wind is already there and Windtec is well positioned although solar is still two generations away from prime time. But, portable fuel cells are ready to enter the market and superconducting is starting to be cost effective in its first niche markets.

So where in the Democratic plan is the opening for AMSC? It is plug-in hybrids. Let people draw cheap electricity to cover their first few driving miles every day. It will focus attention on the grid and power-dense areas where electricity distribution is an issue -- a place where AMSC has product and others do not. The DOE-LIPA project is important to getting this technology on the radar for funding consideration (both federally and at utilities).

Also, there might be a surprise in 2007 that could help AMSC as time passed (and the Democrats beat their drums about the Republicans inability to deal with grid issues). If the Supreme Court puts CO2 on the EPA's regulation list, expect the Democrats to focus on CO2 reduction. One avenue they may take is on efficiency. Instead of building a power plant a week (that is the pace!) and looking only at the smoke stacks of power plants, they may want to see more efficient motors and other energy saving technology that would reduce our use of fuel. If so, AMSC could find itself in the right place at the right time.

The 55 Kelvin cooling target AMSC has in its sights is worth watching. As the temperature required for superconductivity rises, the cost of cooling (and the technology required to get it done) becomes more conventional (and less costly). It is the temperature breakthrough that AMSC has that can provide the competitive edge it needs for its products.

Just one person's opinion...

W.D. (Happy to be a shareholder)
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