Shares of American Superconductor Corp. (NASDAQ: AMSC) touched a new 52-week low of $12.54 on Wednesday morning, as it expects to post a fourth quarter loss mainly reflecting the refusal by one of its customers to accept contracted shipments.
On March 31, Sinovel Wind Group refused to accept contracted shipments of 1.5 megawatt and 3 megawatt wind turbine core electrical components and spare parts that American Superconductor was prepared to deliver.
These delayed shipments are the primary cause for lower-than-anticipated financial results for AMSC's fourth quarter and full fiscal year 2010. The company said Sinovel intends to reduce its level of inventory before accepting further shipments.
The Devens, Massachusetts-headquartered electronic equipment maker said it anticipates fourth-quarter revenue to be less than $42 million and that it will generate a net loss on both a GAAP and non-GAAP basis. Street analysts predict profit of 33 cents a share on revenue of $119.13 million.
American Superconductor lowered its full year 2010 revenue guidance to less than $355 million from previous forecast of $430 million to $440 million. The company now expects earnings to be well below its previous guidance of $0.99 to $1.04 a share, and adjusted earnings to be well below its prior forecast of $1.33 to $1.38 a share. Analysts currently predict profit of $1.33 a share on revenue of $431.95 million.
American Superconductor is scheduled to report its fourth quarter and full year 2010 financial results in May 2011. The company estimates that its balance of cash, cash equivalents, marketable securities and restricted cash as of March 31, 2011 was about $240 million, down from $260.5 million as of December 31, 2010.
American Superconductor said its cash balance was negatively impacted by an increased inventory level related to the refusal of shipments by Sinovel, and Sinovel’s failure to pay AMSC for certain contracted shipments made in fiscal year 2010.
As a result of both accumulated aged accounts receivable due to payment delays and Sinovel’s recent refusal to accept March deliveries, American Superconductor is reviewing the appropriateness of the timing of its revenue recognition on approximately $56 million of unpaid shipments in the second, third and fourth quarters of fiscal 2010.
American Superconductor continues to have active discussions with Sinovel to determine when Sinovel will accept further shipments and when it will pay for past shipments.
In the meantime, American Superconductor has taken certain actions to reduce expenses, and the company is in the process of implementing plans to better align spending with near-term revenues while continuing to maintain a high level of service and support for its global Wind and Grid customers.
Following the release, Law Offices of Howard G. Smith said Wednesday that it is investigating potential claims against American Superconductor concerning possible violations of federal securities laws. The investigation focuses on allegations that certain statements issued by the company between November 2, 2010 and April 5, 2011, regarding AMSC’s business, operations and financial condition were false and misleading.
Specifically, the investigation relates to the company's April 5 announcement that AMSC’s largest customer had refused to accept contracted shipments and has failed to pay AMSC for contract shipments made during the 2010 fiscal year.
On Wednesday, brokerage firms Ardour Capital and Brean Murray has downgraded their rating on shares of American Superconductor to hold from buy.
American Superconductor stock gapped open sharply lower April 6 at $13 compared to previous day's close of $24.88. The stock touched a new low of $12.54 on Wednesday morning. The stock traded between $12.54 and $38.88 during the past 52 weeks.
The stock slumped 45.42 percent to $13.58 on the NASDAQ Stock Market at 11:29 am EDT with a record volume of 17.37 million shares.