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Are IPOs Heating Up? A123 Files.

by: Erick Schonfeld August 08, 2008 | about stocks: RAX    

Erick Schonfeld

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Companies itching to IPO are braving the markets again. This morning, Rackspace had its IPO (RAX) 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 of 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 companyies 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:

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This article has 4 comments:

  •  
    Aug 08 03:03 PM
    I agree with the author, a real story stock and a disruptive technology. This company, unlike many, has significant orders from tool makers as well as the auto companies. The issue here is ramp up, not lack of a proven technology.
    Reply
  •  
    Aug 08 06:37 PM
    A123 batteries rock the party. the B&D tools built around them are as powerful as corded tools and fully recharge during a coffee break.

    and they supposedly last for thousands of cycles.
    Reply
  •  
    Aug 12 10:12 PM
    What's striking is the R&D expenses of $7 Million for three months ended Mar 08, compared to $13M for year 2007. At this rate, 2008 R&D amounts to $28M! They do mention in their S-1 that they anticipate increased R&D due to personnel expansion. But with $50M spent on R&D so far, one would expect some returns and/or same level of R&D spending if not more.
    Reply
  •  
    Oct 22 12:32 PM
    Is there an estimated IPO date for A123? Also will this be an optionable stock?
    Reply
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