SatCon Technology CEO: 'Investing in SatCon is a Way to Invest in the Future'

| About: SatCon Technology (SATCQ)

On May 7, The Wall Street Transcript interviewed Dave Eisenhaure, Founder, President and CEO of SatCon Technology Corporation (SATC). Key excerpts follow:

TWST: What is SatCon?

Mr. Eisenhaure: SatCon is a designer and manufacturer of alternative energy and distributive power products for alternative energy systems in ships, hybrid vehicles and industrial powering systems. We believe that in the near future, there will be a significant transformation in how we generate, distribute and use electrical power. SatCon has systems solutions to facilitate that change, and this change is coming about because the electrical distribution grid is broken. There is a strong international desire to reduce the dependence on fossil fuels, and the environment is becoming a critical concern. The problem today is that there are more people in the world today than throughout all history, and those people are using more and more energy. Today, people in the United States use the equivalent of 25 barrels of fuel oil each. People in China use the equivalent of about 1 barrel of fuel per capita, which is about what the United States used in 1905. Clearly, as China and other economies advance, the energy use worldwide is going to become larger and there has to be a way to accommodate that. If you look at issues associated with global warming, there are a number of studies that show that over the next 100 years, there will be significant changes. Temperatures worldwide could go up as much as 5 degrees Celsius, which would make enormous changes in the environment. The solution to that, which SatCon is very heavily involved with, is to replace our appetite for foreign fuels with efficient energy solutions. By using things like wind, solar, hydro, fuel cells and energy storage, we can reduce our consumption of fossil fuels perhaps back to what they were in 1950, half a century ago. SatCon is building the electronics systems that allow that for alternative energy systems. Our biggest area of growth right now is in photovoltaic systems, where we build the power inverters that take the raw power from photovoltaic cells and turn into three phase, utility quality power that can be sold and used by industrial and residential consumers. The market is reacting to this change right now. The environment, rising oil prices and domestic security are fueling an irreversible trend toward alternative energy that we are very much a part of. Today, real people worldwide are putting real money into alternative energy systems. Many analysts believe that the clean energy business will grow by 20% to 30% a year for the next decade. You are going to start to see the beginnings of that because investment in clean technology startups by venture capitalists and private equity firms has quadrupled in the last two years from $500 million in 2004 to $2 billion in 2006. Investments of all sorts in the business will reach $63 billion compared with $30 billion in 2004. So it is a very hot area, and we are very central to that. We see an opportunity to substantially grow SatCon based on that.

TWST: Over the past four months, you have had new product development and you have had some costs exceeding revenues. SatCon seems to have reached a low point. Why is that low point a positive inflection point for the company?

Mr. Eisenhaure: In a lot of ways, we are at a transition point in the company. We have the highest backlog ever in our history. We have about $35 million in backlog as of the end of the last calendar year, and that backlog will translate directly into increases in revenues going forward. Over the last several years, we have made significant investments in alternative energy products, getting those products out into the marketplace and making sure that those products are the best in class. We have been very successful at that. It has been an excellent investment and well timed on behalf of our shareholders. Given what has happened in the world, we are certainly glad we did that. I think it positions SatCon in a very good place going forward in the marketplace.

TWST: What are your priorities for the next 12 months? What would make that time frame a success?

Mr. Eisenhaure: We want to move forward aggressively into the alternative energy space. It is a worldwide phenomenon. There are subsidies in a number of areas including places like Ontario, California and across the US and Europe to bring these clean energy solutions into the marketplace. We want to be part of that by selling our inverter products - which are a key part of these systems - into that opportunity. We are making a good start right now. Our backlog shows that people want those products and that those products are needed in the marketplace. Our leading activity is to succeed in the photovoltaic marketplace, basically turning sunlight into electricity as opposed to turning fossil fuels into electricity plus greenhouse gases. We are very focused on making that a success going forward over the next 12 months. Clean Edge published a study that said the solar power business worldwide is likely to grow to $70 billion a year by 2016, so there's an enormous business opportunity for new companies. There are going to be companies that you have not heard of playing into that business with companies like SatCon that are relatively small. At this point in time, however, we have a significant opportunity to grow going forward based on our products and services. The overall alternative energy business as projected by Clean Edge is going to grow to well over $200 billion by 2016.

TWST: What historically has been the shareholder base with SatCon? Has that base undergone any changes?

Mr. Eisenhaure: Every time we do a financing or make some announcements, we get new shareholders into the company. I think we have about 3,400 shareholders company-wide right now. Some of those shareholders have been with us since we went public back in 1992. I still get calls from many of them talking about new things that are happening in the company. Over the last 10 years, many of the same people come to our annual meetings, and we have gotten quite familiar with all those people. We are always looking for new shareholders. As this alternative energy opportunity in the marketplace becomes more defined in peoples' minds, new shareholders are going to come into alternative energy companies like SatCon because it is an area of great importance worldwide. Everybody is focused on the environmental issues associated with fossil fuel production. We are seeing the global climate changing, and people want to be a part of change. Investing in SatCon is a way to invest in the future and provide a better environment for our children and others.

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Tagged: , Semiconductor - Broad Line, Interviews
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