Delivering products, Altair now works on credibility
Altair Nanotechnologies has a credibility problem with investors, but Alan Gotcher, the president and chief executive officer of the Reno-based company, thinks he has the answer:
Tell the truth and deliver on the promises you make.
Gotcher faces a key test this spring as Altair has delivered about $1 million worth of batteries for electric cars built by Phoenix Motorcars of Ojai, Calif.
Phoenix projects that its orders for the rest of this year could run between $16 million and $42 million as it buys as many as 500 of Altair’s battery packs.
Those are the first significant orders for products produced by Altair, but investors in the company’s publicly traded stock haven’t been bowled over. Altair’s stock has spent most of the past year trading between $2.50 and $3.50 a share perhaps because potential investors fear they’ve heard all the optimistic talk before.
For instance, Seth Jayson, a columnist for Motley Fool, notes that Altair initially said it shipped 11 battery packs to Phoenix during December, only to later backtrack. In a Securities and Exchange filing, Altair says it billed Phoenix for 11, shipped four and held back seven at the request of Phoenix.
Jayson notes, too, that a recent “buy” rating on Altair’s stock comes from an outfit, Maxim Group, closely linked with a company that recently filed to sell 250,000 Altair shares it owns.
Gotcher, who took the top post at Altair three years ago, acknowledges that the company has what he calls “a colorful past” filled with rosy press releases that often didn’t pan out. But this time, he says, is different.
“Now you can see our products,” he says. “You can touch them. We now have credibility. Our products perform as we said they would.”
And he points to the company’s recent partnerships. Alcoa, for instance, signed on with Altair to develop battery packs for medium-duty trucks.
And AES Corp., a Virginia-based utility, invested $3 million in Altair this winter, saying it was interested in Altair’s battery technology.
Bulls on Altair agree that the company is growing up.
John M.A. Roy, an analyst for W.R. Hambrecht+Co., said in a March research report “investors have seen validation of the business model and products.”
But Roy worries that Phoenix Motorcars may not be able to get the financing it needs this year to buy any more than the minimum number of batteries $16 million worth specified in its contract with Altair.
The battery business is the leading edge of a four-pronged business strategy by Altair. Next up, Gotcher says, will be life-sciences products it’s working to develop products to treat kidney disease as well as a veterinary health line.
The same process that’s the root of the battery and life sciences lines also can be used to produce paint pigments and industrial coatings.
Those products have been winnowed from a list of about 50 that Altair’s scientists had developed in the years before Gotcher’s arrival.
“We needed to focus on doing a few things and doing them well,” he says.
The biggest issue for the Altair management team: Building manufacturing capacity.
The battery packs are manufactured at a company facility at Anderson, Ind., but the life-science products will be manufactured at a new facility the company plans in the Reno area.
Altair currently employs about 75 people in Nevada and Indiana and has said it plans to add at least 30 during this year.
“We’re a Nevada company,” says Gotcher. “You are going to see the bulk of our growth here in northern Nevada.”
That growth carries a price tag, as Altair posted a loss of $17.2 million in 2006. The company never has posted a profit, but Gotcher has told investors the most recent losses are the result of the need to ramp up production capacity.
The company had more than $26 million in cash and marketable securities on its books at the end of 2006 and doesn’t have any debt other than the mortgage on its facilities at 204 Edison Way.
“I point out many cases of where privately owned companies do just as bad a job as publicly owned companies,” says Reno resident and former teacher Robert (R.D.) Gardner.