Companies itching to IPO are braving the markets again. This morning, Rackspace had its IPO, and today nanotech battery company A123 Systems filed its IPO registration document (an S-1) with the SEC. The Boston-based company is hoping to raise $175 million in an IPO. (It’s already raised $132 million in venture funding from Sequoia, General Motors, Motorola, Qualcomm, and others).
A123 Systems makes next-gen lithium ion batteries for electric and hybrid vehicles, as well as for smaller portable devices. It is working closely with GM and Black & Decker. The company, which came out of MIT, already employs 1,100 people (150 in R&D alone), and has been manufacturing batteries for two years. The company’s revenues in the first quarter of 2008 was $10.3 million, and its sales for all ofg 2007 was $41.3 million. It’s also been eating through a lot of cash. Last quarter it had a net loss of $14 million, and last year it lost $31 million.
And those losses are not going to end anytime soon. From the S-1:
We have had negative cash flow before financing activities of $17.0 million for 2005, $29.1 million for 2006, $56.1 million for 2007 and $13.5 million for the three months ended March 31, 2008. We anticipate that we will continue to have negative cash flow for the foreseeable future as we continue to make significant future capital expenditures to expand our manufacturing capacity and incur increased research and development, sales and marketing, and general and administrative expenses.
But A123 Systems is going to be a story stock. If you believe in a future of electric-powered vehicles, it is one way to invest in that future. Of course, other company’s are trying to create batteries for electric vehicles as well, such as Aptera and Tesla Motors (which, in addition to creating its own electric cars, has a deal to supply Mercedes-Benz with electric batteries). But they are still private.
Here’s A123 Systems’ income statement:
No. Desperate VC’s and other equity investors looking for an exit. The capital markets will get worse before they get any better as we have yet to see the bottom due to the credit crisis.
Mid August makes for classic market bottoms, so I bet there will be a lot a companies dusting off their IPO plans (as soon as they get back from vacation).
There have been one fifth the number of IPO’s so far in 2008 as compared to the same period in 2008.
This company looks like it’s in deep.
http://blabtech.blogspot.com
Actually, I reported on the Rackspace IPO last month. I just reported on XDrive not being bought by Box.net as well.
“This company looks like it’s in deep.”
Just look at those parenthesis!!!
If you wanna see the AOL/Time Warner story or the Rackspace story we got ahead of TechCrunch last month, read below.
http://xrl.us/X...NotSoldToBoxNet
eh…i was getting tired of this bubble anyway. let us destroy and rebuild!
I have heard that a123 has some major technology issues.. they might have had them resolved recently… if not I just see that as a way to cash out for the investors before that mess hits the fan.. just my personal opinion..
this is the company providing the battery for the chevy volt plugin electric hybrid.
I’d be interested to know what NOBS and others are referring to when they’ve heard that “A123 has some major technology issues…” (They very well might – I have no idea – but I’d like to know and would appreciate a source instead of rumor)
Also, samy, GM has yet to name a supplier for the Volt. A123 is still in the running, but no decision has yet to be officially made (www.gm-volt.com)
congrats to the A123 system guys!!!
I would wait for more than 2 data points before declaring a trend.
Tesla Motors does not make batteries (cells), they make battery packs and could be a huge customer for A123, not a competitor. A123’s main competitors would be the Asian battery manufacturing giants such as Panasonic and Sanyo.
A123’s main competitors would be the Asian battery manufacturing giants such as Panasonic and Sanyo.
The A123 tech guys at a recent nano conference were talking about some new technology they are buying or licensing – possibly from a west coast startup. Any word on what this might be?
I always hope that new energy sources can catch up and relieve us from pollution. Too bad that it’s not going to happen — gas price is plummeting that will wipe out those teams doing research in such an area. Then, we are at the beginning of anther circle…
A123 is apparently one of them.
James Kuoski
http://ulimits.com
A123 is a good company and a great story. They also have some great people there.
What is shocking though, is not that they are losing money, but that their gross margin is negative. They are actuallly losing more money with each additional sale. Shocking!
Usually early stage companies lose money because sales, marketing, and administrative staff is built up ahead of the company. But for a company that sells hardware like this, you woulod expect the gross margin to be positive…. especially at $9m quarterly revenue. I am sure their story will be that they can lower unit costs when they expand volume… but shouldn;t they have some gross profit at $9m/qtr revenue?
This article is a perfect reason why we shouldn’t read on the news as a source of predictions and trend ‘analysis’.
@scarabic, agreed, so ridiculous to make a broad statement about ‘trends’ here. Big deal, two or three companies file for an IPO. Really, this is just a carefully printed, albeit ludicrous, press release for A123.
I think the IPO market will be pretty dead for the rest of 2008 and most of 2009, the doom and gloom won’t last forever economies follow cycles, unfortunately this particularly one is like the 1930’s.
I am confident that things will return to normal by 2010.