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  • Storm Warnings At A123 Systems [View article]
    The tab welding robot for cell electrodes is a requirement; there is no way to do that by hand and get anything resembling a repeatable process. Other issues may well be among the root-cause problems...
    May 17 10:46 PM | 3 Likes Like |Link to Comment
  • Storm Warnings At A123 Systems [View article]
    John, you make strong points about the toxicity of their financing. But candidly the most worrisome aspect of their current financial plan is that they don't seem to have one. In the investor call on Tuesday, and in response to a direct question, the CFO stated that they did not have a quarterly cash flow model for 2012. Excuse me? Forget the softball questions about 2013 they were eager to answer, how are they going to get past the third quarter?

    Consider the numbers from the previous four quarters: $406 million in total expenses against $158 million in revenue. For 'giggles', let's assume that a third of both the revenue and expense was NRE-related, so that's a variable cost that we can subtract (if they trim quickly) leaving $267 million in expenses. The majority of their prismatic production output will be used just to replace defective product. Let's be gracious and assume they can replicate the remaining production output for two-thirds the previous year's cost, or $175 million in round numbers. Now, let's assume they are cash-breakeven (doubtful) on production for the low end of their new guidance, so they will need another $135 million of working capital this year. That brings their cash requirement for the remainder of 2012 to at least $310 million. Current cash and equivalents are $113 million (the inventory is probably of marginal value), plus $50M from new proceeds, and the revenue they earn from new shipments all equals only $288 million. Realistically, A123 will be effectively out of cash by the end of the third quarter.

    I don't know if they realized it at the time, or if they really had a choice, but the decision to replace all of the Livonia output immediately as opposed to a sequential basis allowing for more earned revenue, has I believe, sealed their fate as a stand-alone entity.
    May 17 05:52 PM | 4 Likes Like |Link to Comment
  • A123 Systems Is Simply Too Risky [View article]
    The GM volt does not use A123's batteries.
    Jan 17 11:34 PM | Likes Like |Link to Comment
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