Malanthus

Analysts See Value In CPST

Scott ATA, before you get too snarky with the author. You might want to consider what the recent secondary offering did to the balance sheet.

32 million + 29 million = 61 million cash on hand.

Lehman Collapse Causes Funding Difficulties for Renewable Energy Companies

Yep, the author dropped the ball on CPST. CPST has good technology, but they do NOT make wind turbines. They make turbines that run off of just about any flammable fuel. They are R&Ding Concentrated Solar Power (CSP) applications now, using CSP super heated air to run the turbine. This application does not apply to PV solar though. Anyway, the idea is that it is suppose to run more efficiently than the current CPS technology.

The Long Case for Capstone Turbine

This company is low on cash and has stated in its conference call that it may have to turn to a bank loan, or a line of credit. If that fails, a secondary offering may be in the picture.

That being said, it is the tier 1 player in this space. No one else can touch its technology. One of its biggest obstacles has been its high fixed costs as the author mentions. They are however ramping up production, they have recently added a partial second shift and have hinted at a further ramp up. Listening to the companies conference call last quarter will reveal that CPST has been in direct talks with its parts suppliers to ensure that they will be able to ramp up production in order to meet their increasing demands.

Capstone's key to profitability is to increase the volume of its sales. People who claim CPST loses $ for every turbine they sell and then go on to claim that if they sell more turbines they will lose more money are completely ignorant of how fixed costs work. Or are blowing smoke up your bum for their own agendas.

Look at it this way, CPST has in place a sales team, an R&D team, a shipping team, a management team, a manufacturing team, offices around the world, parts/supplies etc etc. These all account for costs that, regardless of whether CPST sells one turbine or 150, the company will have to pay for. If you increase production using the same listed resources above, you would only have to increase spending a small percentage to cover increased labor needs and increased parts/supplies. All other costs will remain the same. So lets say CPST had produced 150 turbines, they double their workforce and now are producing 300 turbines. They have doubled their revenue while the costs of the operation more or less remain the same, only increased by the labor and parts increase. So the outcome results in better margins per unit.

As this is pretty basic accounting, and everything that I mentioned is pretty much layed out in their latest CC. I would imagine that some posters are trying to shake some shares out of the retail investor community by using scare tactics. I have seen a large spike in the "bashing" chatter on several message boards, Yahoo's especially.
I am just saying do your own DD before listening to what someone on a message board tells you.

This is definately a speculative stock with risk, but its also a diamond in the rough with a foothold in a lot of market. If they can make it through this rough patch, it should really shine in the long run.

Best of luck to all.