American Superconductor Poised to Drop on Downgrades, Order Loss

Wednesday, 06 Apr 2011 09:27 AM

 

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The wind-turbine components maker American Superconductor Corp. tumbled in pre-market New York trading after its biggest customer refused to accept an order.

American Superconductor slumped 45 percent to $13.70 at 8:29 a.m. today New York time. The Devens, Massachusetts-based company said late yesterday in a statement that it expects to report a net loss for the fiscal fourth-quarter after Sinovel Wind Group Co. refused to accept contracted shipments.

Downgrades of American Superconductor that followed the statement included Jefferies, to “underperform” from “buy,” and Raymond James to "market perform" versus “strong buy.” RW Baird lowered its price target to $11 from $22 with a "neutral’’ rating and Citigroup cut its target from $25 to $17 while maintaining its “hold” rating.

Sinovel on March 31 declined to accept contracted shipments of core electrical components and spare parts for 1.5-megawatt and 3-megawatt wind turbines, American Superconductor said. The manufacturer said it now expects to report total revenue of less than $42 million for the quarter that ended March 31. That’s lower than the $119.2 million median of 13 analysts surveyed by Bloomberg. It will result in a net loss, the company said.

The company said too that full-year revenue will be less than $355 million compared with its previous forecast of $430 million to $440 million.

Full-year earnings are expected to be “well below” the company’s previous forecasts, the company said.

American Superconductor said Sinovel declined to receive the components to reduce inventories. The Beijing-based manufacturer is its largest customer and generated about 70 percent of its revenue in fiscal 2010.

Negotiations are under way to determine when Sinovel will accept further shipments and when it will pay for previous shipments, AMSC said. In the interim, the company said it is taking steps to reduce spending.

The stock had dropped 13 percent through yesterday.

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