Plug Power Inc (PLUG)

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Plug Uncorked
http://www.fool.com/investing/general/2007/03/07/plug-uncorked.aspx?source=eptyholnk303100&logvi...

By Rich Smith
March 7, 2007

As markets across the country and around the globe turned from flaming red to cool green yesterday, one company's shareholders failed to enjoy the change in portfol-iage. That company: Fuel cell pioneer Plug Power (Nasdaq: PLUG), whose shares continued the free fall begun when the company reported just $1 million in fourth-quarter revenues last week -- down 62% versus last year.

The consequences were summed up quite nicely in the title of Reuters' story on the release: "Plug Power Q4 sales decline; shares hit lifetime low." Need we say more?

Yes, please
Fair enough. Then I'll expand on the story. Plug shipped 25 more fuel cell units in Q4 2006 than it had in the previous year. However, 32 of these units were shipped on a "consignment basis" -- which is to say, they're not really sold until they're really sold, if you know what I mean. As such, it's hard to say whether sales improved or worsened last quarter. Likewise, for the year, the 152 units shipped in 2006 were an improvement over the 134 units shipped in 2005 (with the same caveat regarding the consignment portion of the shipments).

Plug's comments on unit installations told a clearer story, if a less happy one. Comparing Q4 2006 to Q4 2005, installations declined from 23 to 14. For the year, they increased by three units -- from 91 in 2005 to 94 in 2006.

Cash burn
With commercial operations still looking pretty iffy, it behooves even speculative investors to keep a sharp eye on this firm's rate of cash burn. In this regard, CEO Dr. Roger Saillant advised that in 2007 he intends to "contain total net cash used in operating activities to $45 [million]-$50 million." For those keeping score, that should hold the cash burn close to constant with 2006's $46.1 million in cash spent on operations (which, when you add on $1.3 million in capital expenditures, yielded cash burn of $47.4 million for the year).

The competition
Rounding out the fuel cell news, in late February, two of Plug's peers reported earnings. Ballard Power (Nasdaq: BLDP) announced growing sales and a declining cash burn rate. At $51.4 million, it's still burning cash faster than Plug; the good news is that Ballard's burn rate has slowed by nearly 40% in comparison to 2005. Millennium Cell (Nasdaq: MCEL) also claims to have reduced its burn rate (but did not include a cash flow statement in its release, so we can't confirm that).

Meanwhile, FuelCell Energy (Nasdaq: FCEL) won't report its earnings until this Thursday. Let's hope its news more resembles that of these latter two companies than it does Plug's.

What did we expect out of Plug last quarter, and what did we get? Find out in:

Foolish Forecast: Plug Injected

A Plug With No Power