A123 3Q loss widens, revenue edges up

Associated Press

A123 Systems Inc., a Watertown-based developer of lithium-ion batteries for use in automobiles, reported a wider loss in its third quarter, its first since going public.

The loss, reported after the markets closed yesterday, was driven by higher product costs and operating expenses, which more than offset a 3 percent rise in revenue.

A123 raised $391 million in net proceeds in its initial public offering in September. The company also won a $249 million grant from the US Department of Energy.

"The high level of interest and design activity across our portfolio of customers and prospects, and in each of our target markets, is encouraging for A123's long-term growth," said A123 chief executive David Vieau.

The company lost $22.9 million, or $1.78 per share, in the three months ended Sept. 30 compared with a loss of $18.9 million a year ago.

Revenue rose to $23.6 million from $22.9 million a year ago.

Deutsche Bank analyst Dan Galves said A123's most important achievements include deals that will drive revenue growth.

Galves said the company signed a production contract with BMW, which he said validates its ability to win mainstream contracts, and is pursuing 7 light-duty vehicle programs, some of which will make sourcing decisions in the next several months.

That will be key for the company as it must reign in new revenue sources to bolster margins, the analyst said.

"Risks are centered around the revenue trajectory," Galves said. "Loss of expected programs would present downside and significant new business wins would present upside."

Shares of the company fell 44 cents, or 2.5 percent, to $17.54 in morning trading today.