Advanced Battery Technologies (ABAT) posted its earnings results yesterday smashing analyst estimates on the EPS side (posting .20/share vs the estimate for .10 share) but missed on the revenue side (posting $28.6 million vs the estimate for $32.5 million.  The EPS beat was despite a reduction in gross margins due to rising costs particularly in the small capacity lithium battery segment.  The company expects margins to remain under a bit of pressure for the remainder of the year.

==> Click Here For Your FREE Daily ABAT Analysis

Here are some highlights of comments made by CEO Zhiguo Fu:

– still had over $110 million in working capital despite purchasing Shenzhen and the industrial park in Dongguan

– solid backlog, expects positive results in coming months

– noted the assault by short sellers and strike suits

"The strong financial results achieved in the first quarter are particularly heartening, as our Company is currently under assault from short-sellers and strike suits. Even as we were completing our quarterly financial report, on May 5, 2011 yet another "report" regarding ABAT was circulated by two acknowledged short-sellers whose sole objective is to manipulate and depress the price of ABAT shares for personal financial gain. These and other similar "reports" are premised on gross inaccuracies and distortion of facts, information derived from unidentified "investigators" and "customers," and unsubstantiated rumor and innuendo. ABAT has previously responded to these unfounded attacks, will not dignify them with further response, and will vigorously defend itself in the securities class actions premised on these baseless publications."

Shares of ABAT didn’t really move much on the overall positive earnings report as the hit pieces by short sellers continue to weigh on the stock.  Technically, there is considerable damage to be repaired so shares should continue to be avoided at this time.  However, in the future, the dramatic selling may offer a mighty compelling entry point.