It’s not a pleasant time for the Douglas family, which recently purchased tens of millions in American Superconductor (NASDAQ:AMSC) stock (or for any shareholder who did the same, for that matter). The stock was crashing 40% in after hours trading after the company revealed that its main customer, Sinovel, has refused shipments, forcing the company to slash guidance. American Superconductor now expects to report a significant quarterly loss on both a GAAP and non-GAAP basis.
CEO Greg Yurek, who has always been on the defensive about his company’s reliance on one customer, commented:
On March 31, 2011, Sinovel Wind Group Co., Ltd. (Sinovel) refused to accept contracted shipments of 1.5 megawatt (MW) and 3 MW wind turbine core electrical components and spare parts that AMSC was prepared to deliver. AMSC believes that Sinovel intends to reduce its level of inventory before accepting further shipments.
The company now expects fiscal Q4 revenues of just $42 million and the full-year revenue number to come in at less than $355 million. The question will now fly as to what AMSC knew and when, and you can expect the shareholder lawsuits to begin. It will be interesting to gauge analyst reactions today.