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On July 18, the same day AMSC unveiled the "World's First 5,000 hp HTS Motor" (http://www.amsuper.com/5000htsmotor.htm), David Bogoslaw of Dow Jones Newswires wrote "New Superconductors Could Spark Silver Demand Explosion". American Superconductor is featured prominently in his article because silver is a key component in the HTS wire the company is producing for the Pirelli cables used in the Detroit project. The article is mainly about the advantages of protecting the extremely brittle superconducting ceramic filaments by sheathing them in a silver alloy and why that will increase the demand for silver exponentially.

Juan Farre, chief executive officer of Copenhagen-based Nordic Superconductor Technologies A/S, estimates that the annual worldwide demand for silver in superconductors will be "2 million ounces from 2002, assuming that a quarter of global market share would be captured by AMSC's Devens plant." Statements by CEO Greg Yurek give insight into the company's vision, as he discusses plans for the Devens plant, currently producing 500 kilometers of wire, to increase annual output to 20,000 within a few years.

From the article, "Yurek regards the potential market for superconductors as substantial, citing research by the Electric Power Research Institute, one of AMSC's partners in the Detroit project. EPRI's survey of utilities around the U.S. showed that there are 3,000 circuit-kilometers ripe for replacement in order to upgrade worn-out cables and increase power flow."

The 20,000km of HTS wire the AMSC's Devens plant will eventually produce would be enough for 150 circuit-km of superconducting cable, just 5% of that market, Yurek said.


IF EPRI's survey proved to be anywhere near accurate and not just more hype, and IF those utilities chose to install superconducting cable, the Devens plant alone wouldn't be able to keep pace with the demand. I agree with TimBurcroff that Greg Yurek has demonstrated in the past that he is a strategic thinker. Does it seem reasonable that American Superconductor would be producing 25% of global market share in 2002, as predicted, and as demand increases drop to just 5% of the market eventually because the Devens plant reaches capacity? It seems more likely that AMSC would find a way to increase production capacity IF the need arises.

This sounds good, but it is all hypothetical with a lot of "IF's".

It's difficult to reconcile Yurek's comments above with statements under "Quantitative and Qualitative Disclosures about Market Risk" in the Annual Report (SEC form 10-K), filed June 27, 2001.

We have a history of operating losses and we expect to continue to incur losses in the future.
Assuming the company can stay solvent in spite of these losses, there are still other hurdles.

There are a number of technological challenges that must be successfully addressed before our superconducting products can gain widespread commercial acceptance.
Principal challenges appear to be price and performance with regard to insulation and cryogenics.

We do not believe any company has yet successfully developed and commercialized significant quantities of HTS wire or wire products.

We also believe that several years of further development in the cable and motor industries will be necessary before a substantial number of additional commercial applications for our HTS wire in these industries can be developed and proven.

The commercial uses of superconducting products are very limited today, and a widespread commercial market for our products may not develop.

To date, there has been no widespread commerical use of HTS products.

We have historically focused on research and development activities and have limited experience in marketing and selling our products…essential to our future success.


The Detroit project has received a lot of attention lately, keeping American Superconductor in the news. But SMES and D-SMES sales have been disappointing, missing projections for consecutive quarters. The conference call next week needs to address these current concerns.

Judy

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Because this is a specific stock board, I hesitate to submit posts such as my last ones. But I noticed that there have been several postings lately from less experienced investors who are just checking out American Superconductor. I remember feeling like a stranger in a strange land. I appreciated those who advised me, whether I agreed with them or not. I thought sharing my views and conclusions might help someone else. Thank you, "delighted", for letting me know my efforts weren't in vain.

I'm glad you decided to follow AMSC. Yes, it is an interesting company--one with loads of potential. And yes, it is a speculative stock, so it involves plenty of risk. But the team assembled at the helm has impressive expertise and experience. The question is and has always been whether they will be able to produce a viable product for which there is a market.
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