The shares of American Superconductor Corp. (AMSC) plunged some 45% this morning after the company warned of lower results than previously expected due to their largest customer – and China’s biggest wind turbine manufacturer – Sinovel Wind Group, refusing shipments in order to reduce inventory.
AMSC’s over reliance on one large customer was part of the equation all along, but the news shocked investors nevertheless and they dumped the stock. It’s too late to sell the stock – the damage is done for the near-term.
Details of Sinovel’s intentions have not been released, but AMSC lowered their Q4 outlook to less than $42 million in revenue, and less than $335 million for the full fiscal year (down from a range of $430-$440.)
The plunge should be kept in perspective. AMSC has strong technology and an ability to sell their products. Two years ago, they finished FY2009 with revenue of $182 million, and the shares traded at the same price as today.
AMSC is very undervalued at this level and aggressive investors could view this as a good time to buy the stock.
Ardour Capital says Sinovel’s reason for rejecting shipments isn’t reasonable because they were able to sell every turbine they made in the second half of 2010, according to their annual report.
Perhaps Sinovel is looking at another supplier or it’s a tactic to get AMSC to reduce its prices or modify their supply contract, Ardour says. They are waiting for clarity.
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