I really can't understand what is going on with this stock? Yesterday's news is the biggest news for FCEL in over a year. The stock should be going higher...not lower. Someone is working to keep the price low. I'm just a small investor but FCEL is actually my largest position. I beleive in the company but the stock just gets beat down. I have o intetion on selling but this gets frustrating!
I believe the reason FCEL is not rising is the fact that the royalty with POSCO is only three percent. If POSCO sold 1 billion worth of fuel cells, That would only be 30 million for FCEL or 16 cents per outstanding share. Not a very good deal for FCEL IMO. Since POSCO will be supplying the Asian market, FCEL has to make its money with mostly developed countries many of whom are having economic problems. With cheap natural gas, FCEL has to compete with cheap natural gas powered turbine plants. If FCEL can reach their goal of producing electricity cheaper than other generating methods, then they should do very well, if not it will be tough. Just my thoughts.
Is 3% a bad rate for royalties? I don't know.
But won't FCEL also operate/service all of the POSCO units being sold, for an ongoing revenue stream? Don't you have to factor that into your calculations of benefit/profit?
I'm estimating that this 3% royalty rate corresponds to ~$40,000 per MW. Does anyone know what the service contract rates are, on a per-MW basis?
Big News doesn't guarantee profitability. FCEL got to show they can profit from all those Contracts. In the fast they've failed to profit from many Contracts that was signed. Going into Business, you just have to make Money or else.