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Running with the wind

Can a company that's been losing money nonstop for nearly 20 years finally have the wind at its back?

American Superconductor Corp., of Westborough, was founded two decades ago and has been public since 1991, losing money quarter by quarter as it worked to develop wire with an extraordinary capacity to conduct electricity.

As it happens, the company is on the verge of some important developments with its superconducting wire. But that isn't the main thing propelling its shares up 33 percent so far this year. Investor interest is in the wind.

American Superconductor, which had sold some hardware to wind farms in the past, took another big step into that business two months ago, when it closed on the acquisition of an Austrian design and engineering firm called Windtec.

Windtec designs wind-turbine systems from the ground up and then licenses those plans to manufacturers around the world, collecting upfront fees and, later, royalties on units produced. Those wind-turbine systems will buy some of American Superconductor's electrical hardware, such as voltage regulators placed between a wind farm and a power grid.

Windtec's biggest opportunities have come from emerging-market nations. It has contracts with two big-project construction companies in China and another customer in South Korea. Windtec already had a backlog worth $35 million when its acquisition by American Superconductor closed.

Emerging markets are "where the biggest unmet need is," says Greg Yurek , chief executive of American Superconductor. "Growing economies require a growing electrical supply, and wind is just one source. You're also seeing a growing sensitivity to the issue of pollution."

Alternative energy sources, and companies that work on them, are hardly new discoveries on Wall Street. Shares of Evergreen Solar Inc. in Marlborough fell hard last year but have still produced an average annual gain of nearly 29 percent over the past five years.

But there are lots of public companies working on solar energy. Most other alternative energy stocks have plenty of company, too. There are few pure-play stocks for investors who want to put some money in the wind.

General Electric Co. builds wind-power systems. So does Vestas Wind Systems, a public company in Denmark. Two other companies have licensing-based businesses similar to Windtec, one of which is publicly traded in Europe. That's about it.

"Personally, I don't see us as a pure play in the wind business," Yurek says. "There are other things going on here. But with over 50 percent of our revenues in wind, we are a direct investment in the wind opportunity."

American Superconductor shares, which closed yesterday at $13.12, are up 33.7 percent so far this year and 40.5 percent over the past 12 months. But the stock, which has a record of ups and downs, traded above $17 three years ago and peaked at a whopping $69.25 in the looney-bin days of 2000.

Of course, there is also the long history of losing money. Company executives say they expect to make money, before depreciation, interest, taxes and stock-based compensation, in the fiscal year that begins in 13 months.

Investors go hot and cold on alternative energy. But the wind isn't going away, nor is the emerging world's booming growth.

The Red Herring
He's outta there: Burton Firtel had a few parting shots in his letter resigning from the board of Pro-Pharmaceuticals Inc. in Newton recently. Firtel said he had offered to organize a marketing department in anticipation of regulatory approval for the company's new drug but was turned down. He refers to that and other "unfulfilled promises." Firtel adds that someone suggested he resign but remain a "friend" of the company. "I found that idea to be a contradiction," he wrote. Ouch.

Steven Syre is a Globe columnist. He can be reached at syre@globe.com.

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