Energy Conversion Devices (ENER) Message Board
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Now if Stempel could do this for us...
By Carol S. Remond
A Dow Jones Newswires Column
(This article was originally published Monday)
NEW YORK (Dow Jones)--If you play with the big boys, you must be one of the
big boys yourself.
That's the impression some investors may have had after viewing a video
marketed in a promotional email about a company called Raser Technologies Inc.
(RSTG). But sometimes the camera doesn't always tell the whole story.
The video assembled some big name people who all seemed to be lending their
names to the company and its electric motor technology - a former General
Motors Corp. chairman, a famous race car driver, a top executive with Dana
Corp. and an official from a U.S. Army research center.
But three of the four men featured in the Raser video, which was shot during
a demonstration at Dana's proving grounds near Detroit, say they had no idea
that the footage would be used in a promotional video. In fact, all three were
under the impression that ABC Television would attend the test to shoot a
special on hybrid vehicles. A spokesman for Raser wasn't available to comment
on the matter. A call to ABC Chicago inquiring about the hybrid vehicle special
was not immediately returned.
Combine this video episode with a few other facts about the company and some
investors may want to rethink their bullish sentiments about Raser. After all,
it is a start-up company with no revenues but carries a market cap of about $1
billion. Because it has little money, it pays consultants by issuing shares of
common stock. And the stock is controlled by insiders and employees who own
around 51% of the shares outstanding.
The stock has been on quite a ride the past month or so. On April 6, it
traded at $50, giving the company a market cap value of about $2.5 billion.
Raser Chief Financial Officer William Dwyer said the company doesn't comment on
its stock price or trading and that it does not make earnings or revenues
projections. "We try to get information to investors and let them make a
decision," Dwyer said in a phone interview on May 3.
Some of that information apparently includes very recognizable people
appearing on a promotional video that was posted on Raser's website but has
since been edited after Dow Jones started asking questions about it.
In an original version of the video which has now disappeared from the Raser
website, Dennis Wend, the executive director of the U.S. Army National
Automotive Center, or NAC, could be seen talking about "two great things the
Army is doing with Raser". Wend described a long term cooperative research and
development agreement between the Army and Raser and a short-term project to
develop an integrated starter alternator.-
Thanks for posting that, I noticed it earlier at my brokerage site (but they prevent copying).
Outrageous pump! Dump to follow soon? The following quote is a good example of why I harp on the irrationality of the stock market. Sure, some will make good money by playhing on this irrationality -- and others will lose -- but, I find it a disgusting display of -- err -- decent words fail me.
<<<On April 6, it
traded at $50, giving the company a market cap value of about $2.5 billion.
Raser Chief Financial Officer William Dwyer said the company doesn't comment on
its stock price or trading and that it does not make earnings or revenues
projections. "We try to get information to investors and let them make a
decision," Dwyer said in a phone interview on May 3.>>> -
Later, an Army spokesman said that it doesn't have a long-term agreement with
Raser. Wend's comments on the video were first trimmed down after Dow Jones
inquired about them. And a few days later, Wend's appearance was entirely
edited out of the video.
Hal Almand, team leader for Wend, said Raser was not authorized to use Wend's
comments. Almand said that Wend was "very upset with the company for the fact
that they used him in a video."
Raser's CFO Dwyer said that he wasn't aware of changes to the video. He said
that if Raser used Wend's comments "it's because he approved them."
So far, Raser has secured a Phase One $70,000 Small Business Innovative
Research Program (SBIR) agreement with the U.S. Army for which the company is
scheduled to deliver results on modeling and simulation for a new integrated
starter alternator in October.
Meanwhile, Ed Greif, vice president and general manager of Dana, also said he
didn't know that Raser was going to use his comments in a video. "I can't help
the way they used my likeness," Greif said. Greif said that Dana is always
reviewing small technology companies like Raser but that he has no idea how
long such an evaluation would take.
Former GM Chief Executive Officer Bob Stempel didn't know that his comments
would be used "that way" by Raser, a spokesman for Stempel said. The spokesman
said Stempel was not there to endorse Raser's technology. Earlier, Stempel said
in a telephone interview that he attended the test at which the Raser video was
shot because "we wanted to be sure Raser knew about our technology." Stempel is
chairman and chief executive officer of Energy Conversion Devices Inc. (ENER),
a company which among other things produces hybrid batteries.
The one person who apparently knew that his comments would be used by Raser
was 1985 Indianapolis 500 winner Danny Sullivan. The race-car driver was paid
2,500 shares for driving a Raser-modified electric motor car during the test
and for commenting about its performance. Sullivan couldn't be reached for
comment. The company disclosed Sullivan's stock compensation after Dow Jones
inquired about it.
This is not the first time that Raser put a positive spin on corporate
developments. In a press release on Feb. 10, the company told investors that
"the U.S. Department of Energy (DOE), has selected Raser for award of an Energy
Conversion Science grant under the State Technologies Advancement Collaborative
(STAC)." Raser said in the release that it "is the primary recipient of the
award" and that it will be joined in the project by Advanced Energy.
A little digging shows that it's kind of the other way around. The grant was
awarded to Advanced Energy, a North Carolina independent non-profit
corporation. Raser is a subcontractor to Advanced Energy which will serve as an
independent tester of some of the new technology being developed by Raser.
Testing isn't scheduled to start for months, and the bulk of the almost
$250,000 in funding coming from the DOE won't be forthcoming until Raser
produces a prototype for Advanced Energy to evaluate. "We are the primary
contractor and they (Raser) are subcontracted," said Advanced Energy's Ward
Lenz when asked about the project. "I wish that we could have reviewed (the
Raser press release)," Lenz said.- 1 Reply to ecd_anonymous
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Raser came to life as a public corporation in October 2003 after its reverse
merger with a shell company called Wasatch Web Advisors Inc. Moving ahead with
its plans to develop its alternative electric motor, Raser ramped up spending
in 2004 to about $6.8 million, from $750,000 in 2003. But most of that
increased spending, $5.2 million to be exact, went to general and
administrative spending like salaries and equity based compensation rather than
the research and development one would have expected. For the first quarter of
2005, Raser posted a net loss of $2.2 million and no revenue with a first
quarter loss of 5 cents a share. Raser is in the early stage of developing its
Symetron technology which it says can improve the efficiency of electric
motors. The company plans to license its technology but so far has no contract.
As of the end of March, Raser had netted only $30,000 in revenues with a net
loss of almost $16 million.
Despite Raser's unproven technology, the company's stock is currently trading
at $21.20 a share, bringing Raser's market capitalization to about $1.04
billion.
Raser's CFO Dwyer said that the company is in discussions to license its
technology. "We're hopeful that we'll have licenses well before a year but
that's about as much as I can say," he said.
Like many development stage companies, Raser has made generous use of stock
to finance itself. Most recently it raised $18.5 million by issuing Series C
convertible preferred shares exchangeable into a minimum of 833,333 shares of
common stock at an initial conversion price of $24 a share. These convertible
shares are now registered with the SEC. That means that they can be converted
and sold at any time which will dilute existing shares, potentially pressuring
the stock price. Under the terms of the transaction, Series C convertible
shares outstanding 60 days after their May 4 registration will be automatically
converted into common stock "at the then-applicable conversion price."
Meanwhile, despite a recent stumble in Raser's stock price, a number of the
original investors in the company have made out quite well selling shares as
they became free to trade.
Perhaps perfectly illustrating the vicissitude of Raser's stock price, one
very lucky shareholder named Kelly Trimble in January made a quick $125,000
selling 7,500 shares he got just two months earlier as payment for a
motorcycle. Reached by telephone in Salt Lake City and asked about the
transaction, Trimble simply responded "it's really none of your business."
(Those shares were worth about $43,500 on the day that the motorcycle changed
hands).
(Carol S. Remond is an award-winning columnist and one of four who write
the "In The Money" feature)
-By Carol S. Remond; Dow Jones Newswires; 201 938 2074;
carol.remond@dowjones.com
(END) Dow Jones Newswires
05-17-05 0731ET
07:31 051705
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