American Superconductor Corporation (AMSC) Still Faces Big Challenges

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On Friday, American Superconductor Corporation (NASDAQ:AMSC) will release its latest quarterly results. After the loss of its largest customer two years ago, the company has had to make a massive readjustment in its business model, and investors still aren’t sure whether it can bounce back from that major setback.

American Superconductor Corporation (NASDAQ:AMSC)Now, American Superconductor Corporation (NASDAQ:AMSC) is looking at the solar-inverter market, which has gone through its own tough times but which has the potential to produce long-term profits. But as a small player, the company faces plenty of competition from a wide range of much larger rivals. Let’s take an early look at what’s been happening with American Superconductor Corporation (NASDAQ:AMSC) over the past quarter and what we’re likely to see in its quarterly report.

Stats on American Superconductor

Analyst EPS Estimate ($0.21)
Year-Ago EPS ($0.30)
Revenue Estimate $18.8 million
Change From Year-Ago Revenue (34%)
Earnings Beats in Past 4 Quarters 4

Source: Yahoo! Finance, S&P Capital IQ.

Will American Superconductor ever power up its earnings?
Analysts remain pessimistic about American Superconductor Corporation (NASDAQ:AMSC)’s earnings prospects. Although they’ve narrowed their March-quarter loss estimates by a penny per share in the past few months, they’ve widened their expectations for a fiscal-year loss next year by $0.04 per share. The stock has been similarly gloomy in its movements, falling more than 8% since early March.

American Superconductor Corporation (NASDAQ:AMSC)’s challenges involve a sad story of deceit that highlights the difficulty in protecting intellectual property. In 2011, Sinovel, a Chinese wind energy company that was American Superconductor Corporation (NASDAQ:AMSC)’s main customer, refused to take delivery of a shipment of products and withheld payment for previous shipments. Allegations came out that a former employee of American Superconductor had sold company trade secrets to Sinovel, which allowed the Chinese company to develop its own alternatives to American Superconductor’s technology and thereby made the relationship unnecessary. In lawsuits the company filed, American Superconductor is seeking enforcement of the contracts, which are worth about $700 million, as well as $450 million in damages in its trade-secret suit. But the journey through the Chinese legal system has been arduous, and with courts still hashing out jurisdictional issues, it could be years before the substance of American Superconductor’s allegations goes before a court.

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