A123 Systems (AONE) Misses, But Sees Q2 Pick Up

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05:55:10 pm on February 28, 2011

As expected A123 Systems (AONE) reported another loss, but it was larger than analysts had expected.  The company reported and EPS loss of $0.43/share on revenues of $24 million.  Analysts expected a loss of $0.37 share on revenues of $26 million.

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The CEO remains optimistic that the pieces are in place for big growth in the coming years, but didn’t give specific guidance for this quarter for the full year:  "During 2010, we more than doubled A123’s worldwide manufacturing capacity on an annual basis, and put in place the foundation to support rapid growth in the years ahead," said David Vieau, CEO of A123 Systems. "A123’s momentum is strong and we have expanded our portfolio of blue-chip customers in each of our target markets. We were awarded a production contract with a major North American automaker for an electric passenger car that is expected to enter the market during 2013, and we were recently selected by three new customers for commercial vehicle programs that we expect to enter production starting in 2012. In addition, we believe that A123’s selection by AES to provide energy storage systems for a second power plant in Chile, combined with our work with power generation equipment manufacturers, reinforces our worldwide leadership position in the electric grid market."

Vieau added, "While costs for our capacity expansion are higher than originally anticipated, they support plans that we believe will enable A123 to be a leading market share supplier in each of our target markets. We expect to see an inflection point in our revenue in the second quarter of 2011 with several customer programs scheduled to enter volume production. In addition, we continue to be optimistic about the expected long-term demand for advanced battery systems, as well as A123’s technology and market leadership position."

At last check, shares of AONE were trading down a few percent in after hours trading.  The first key support level is the 200 day moving average around the $9 level, but the stock may need to retest the November lows below the $8 level.  In my opinion, it’s still too soon to consider a position in AONE.

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