A123 Systems (NASDAQ: AONE) got its start back in 2001 in Dr. Yet-Ming Chiang's laboratory in MIT. Along with two others -- Gilbert N. Riley, Jr., and Ric Fulop -- he saw a huge opportunity to build new battery technology. While it took six years to hit the market, it was well worth the effort.
Today, A123 launched its IPO (here's a profile on the deal). The company sold 28.1 million shares at $13.50 each. With this slug of capital, A123 can continue to build out its operations and capitalize on the growth opportunities.
The company's batteries, which use advanced rechargeable lithium-ion, has had the most success in the transportation industry. Some of the key customers include BMW, Chrysler, GM, Shanghai Automotive Industry Corp., and Delphi. In fact, this market segment is expected to reach $74.1 billion by 2020.
Interestingly enough, with GM and Chrysler as government controlled entities, there's a strong likelihood that there will be much pressure to use more fuel-efficient alternatives like A123's batteries. Keep in mind that the company recently snagged $249.1 million from the U.S.'s stimulus program.
In its history, A123 has generated $188.2 million in revenues. However, the losses have been substantial (the company posted a net loss of $40.7 million for the first half of this year). Then again, in a new market, this is expected.
Something else that is expected: lots of competition. Given the size of the market and the potential growth opportunity, there are a variety of other players -- across the globe -- who are trying to become the winners.
Tom Taulli is the author of various books, including The Complete M&A Handbook
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Reader Comments (Page 1 of 1)
9-30-2009 @ 4:41PM
futurestuf said...
What I just don't get is how does a battery company that makes batteries for Drills get a huge government contract for auto batteries.
I have been watching VLNC go up and down for a few years now and they have a real product that is currently being sold and installed into vehicles including cars, buses, motorcycles, etc... Shouldn't a company that has a proven product that you can purchase now - a battery PACK for vehicles be worth more than one transitioning from power tools??? For A123's sake I hope the government handouts keep coming.