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No. of Recommendations: 2
One slight concern is the large ammount of 1G stock on hand when the 2G product was made available. The latest 10K says they have 400,000 m of 1G wire in stock. That seems a large amount of all the 1G wire produced ever. So how come it is not sold? Were customers waiting for 2G or is there some sort of problem with 1G??

I had not noticed this 1G inventory with concern until your comment. Here is what the company says in the latest 10-Q:

As discussed in our May 1, 2006 Form 8-K, our recent success in the development efforts related to our lower-cost, second generation (2G) HTS wire led to a management decision in March 2006 to complete the transition of our HTS wire manufacturing operation from first generation (1G) to 2G HTS wire. As a result, all 1G wire production has been indefinitely suspended with near-term market needs for HTS wire to be met from more than 400,000 meters of 1G HTS wire inventory that is currently in stock. We expect this action will enable us to achieve our sales objectives for HTS wire while reducing operating losses and operating cash requirements for our AMSC Wires business unit.

Note how they mention the 2G is lower cost but the 1G is going to allow them to meet near-term needs and reduce their operating losses. It sounds like there is a big enough shortage of wire that they will be able to sell the 1G and get it off their hands. Since the form and function of the wire is similar, that is probably the sole factor (along with the shortage) that stops this inventory from being a write-off concern.

That said, nice catch Tango. If this wire is still around at the end of next quarter this will be a big concern.

As for an entry price, I use StockCharts.com to tell me when to buy. I use the relative strength indicator (RSI), moving average convergence/divergence (MACD), and the 50 and 200 day moving averages to give me the entry point. The charts still look weak. My guess is that my entry point will be in the $9 area but I will post when I make my first purchase.

W.D.
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