American Superconducter Plummets After Announcement Of Order Cancellation To Biggest Chinese Customer Due To Overinventory

Tyler Durden's picture

A stock falling due to a cut in FY outlook is nothing new. However, a stock cutting its outlook due to its biggest customer refusing to accept contracted shipments "until it
reduces inventory levels" is probably the first confirmation we have ever seen of the massive inventory overbuild in China. The plunge in AMSC stock afterhours by over 40% is not surprising considering its entire business model is now turned upside down. What also should not be a surprise is when ever more companies delivering into China commence with comparable announcements. And with China drowning in excess inventory of virtually everything, this certainty is just a matter of time.

From Reuters:

American Superconductor Corp , which makes electrical systems for wind farms, cut its full-year outlook and said its biggest customer China's Sinovel Wind has refused to accept contracted shipments until it reduces inventory levels.

On March 31, Sinovel refused to accept contracted shipments of 1.5 megawatt (MW) and 3 MW wind turbine core electrical components and spare parts that AMSC was prepared to deliver, the company said in a statement.

And the full press release:

DEVENS, Mass. – April 5, 2011 – American Superconductor Corporation (NASDAQ: AMSC), a global power technologies company, today issued an update regarding its anticipated financial results for its fourth quarter and fiscal year 2010 ended March 31, 2011. AMSC expects to report final fourth quarter and full fiscal year 2010 results in May 2011.

On March 31, 2011, Sinovel Wind Group Co., Ltd. (Sinovel) refused to accept contracted shipments of 1.5 megawatt (MW) and 3 MW wind turbine core electrical components and spare parts that AMSC was prepared to deliver. AMSC believes that Sinovel intends to reduce its level of inventory before accepting further shipments.

These delayed shipments are the primary cause for lower-than-anticipated financial results for AMSC’s fourth quarter and full fiscal year 2010. AMSC currently expects total revenues for its fourth fiscal quarter will be less than $42 million and that it will generate a net loss for the fourth quarter on both a GAAP and non-GAAP basis. As a result, AMSC currently expects its full year fiscal 2010 revenues to be less than $355 million. This compares with the company’s prior forecast for fiscal 2010 revenues of $430 million to $440 million. AMSC also expects that its GAAP and non-GAAP earnings for full year fiscal 2010 will be well below the company’s previous forecasts.

AMSC estimates that its balance of cash, cash equivalents, marketable securities and restricted cash as of March 31, 2011 was approximately $240 million. This is down from $260.5 million as of December 31, 2010. AMSC’s cash balance was negatively impacted by an increased inventory level related to the refusal of shipments by Sinovel, and Sinovel’s failure to pay AMSC for certain contracted shipments made in fiscal year 2010. As a result of both accumulated aged accounts receivable due to payment delays and Sinovel’s recent refusal to accept March deliveries, AMSC is reviewing the appropriateness of the timing of its revenue recognition on approximately $56 million of unpaid shipments in the second, third and fourth quarters of fiscal 2010.

AMSC continues to have active discussions with Sinovel to determine when Sinovel will accept further shipments and when it will pay for past shipments. In the meantime, AMSC has taken certain actions to reduce expenses, and the company is in the process of implementing plans to better align spending with near-term revenues while continuing to maintain a high level of service and support for its global Wind and Grid customers.

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pendragon's picture

bring on the bear....

depression's picture

Deflation Bitchez !!

Bernank + 1 FTW

Highrev's picture

This is a good "shit just got real" moment.

SheepDog-One's picture

'Deflation' in bubble stocks anyway.

covert's picture

strange contradiction here: is there excesess inventory or a job shortage?


bankonzhongguo's picture

I hope those contracts stipulate a US or Singapore venue.

Mad Max's picture

Even if they do, how do you collect?

Nedly66's picture

umm sue them??

tmosley's picture

Good luck with that, Round Eye.

Id fight Gandhi's picture

China don't play by the rules!

Sudden Debt's picture




Hephasteus's picture

Send in the spalding smailes artificial stupidity botnet.

I still want to constantly say dirty stinky jew. Just to fire off all those israli bots and make them waste electricity while everybody is rioting around them.

spartan117's picture

maybe trade the goods for some of them FRNs

Chuck Walla's picture

Rotsa Ruck, Yankee Fuck!

Bold Eagle's picture

Here goes the inventory component of the US GDP

Cash_is_Trash's picture

One day the explanation won't be overinventory but "lack of credibility in the USD".

USD = No Store of Value

jkruffin's picture

WOW, this is exactly the type of morons investing in over-bloated stocks....Goldman just licked their chops.   This is an after hours post on AMSC on the dumbass Yahoo board.  I mean people who have no clue are investing, not just no clue, but no F**KING CLUE.

2-1 split after the bell. congrats



ROFLMFAO!!!!!!!!!!!!!!!!!!!!!!!!   HAHAHAHA!!!


rocker's picture

Jim Cramer gave a 15 minute speech on this when it gapped up to $29.00 plus.  Who buys gap ups?  I sell them if I have it.

This is just too funny. Wonder if he will talk about it later.    $13.77 now, and it will go lower.

Sudden Debt's picture

superconductors aren't death stocks. They are quite valuable and will also keep rising in price.

Once the Chinese realize they can sell them to another party, they'll make a nice profit on it.

Below 12$, it's a buy.

Not that I'm buying them, 95% of my assets are in PM's :)

But if you like the dogtrack, you can make money on this one to.

gorillaonyourback's picture

where is the data backing your opinion, i am from missouri so please if you have data post it.  please dont waste my time responding to your post, as of now your are just a retard poster prove me wrong, please.

Sudden Debt's picture

Only idiots can counter a thought with insults.

1. I proved you're a idiot.

And what does Missouri have to do with this? Is it a warning to me that you're a swam hillbilly?

Please explain.

Sudden Debt's picture


Ancona's picture

"Who is Jim Cramer"?

I think he's the guy on Seinfeld, you know, the goofy fucker with crazy hair that never knocks befoire he barges in.

Chuck Walla's picture

Jim got his pals out so what does it matter to him?

jkruffin's picture

Anymore of these gem companies supplying china out there to short before the whammies?

Peterpaul's picture

they did this with the Brazilian soy bean imports a few years back - bankrupted some exporters, IIRC. The government found problems with the shipments, held them at the border, and sent them back.


At least now they dispense with the formalities. We ain't taking it! Whachou goin' do 'bout it?

Mad Max's picture

Whachou goin' do 'bout it?

Nuke em.  They wanna play by big boy rules, we can play by big boy rules.  Long history in east/west trade, you know.

Seer's picture

Are you suffering from the delusion that the US plays fairly?  Fucking hilarious!

Yeah, nuke 'em and watch the US crash instantly: wipe out those who are propping you up, talk about biting the hand that feeds you.

Better luck next time, Dr. Strange Love...

Mad Max's picture

Are you suffering from the delusion that the US plays fairly?

Did you even read my comment?  It's quite the opposite of "playing fairly."

topcallingtroll's picture

Maybe hyperinflationistas need to revise their opinions!

China is about to crash. I will just love rubbing it into the america haters on this site who seem to think china and the yuan are inevitably going to dominate the united states.

Anyone in the market for a ghost city? I hear the chinese may have a few. New and never used.

Cursive's picture

It will be so obvious in hindsight, but right up until the end we're going to hear BTFD.

Seer's picture

" I will just love rubbing it into the america haters on this site who seem to think china and the yuan are inevitably going to dominate the united states."

And if you think that all "america haters' believe this then you're a stupid fuck.

Being the myopic fuck that you are you'd label me an "america hater."  I am, after all, anti-empire: but mindless robots aren't programmed to understand the differences.  I have NEVER championed China; I have always pointed out that China is running headlong into a collapse, and this will likewise collapse the US.

Take youre broad brush and shove it up your ass.

Please note that I speak harshly just to get your attention.  If you don't get it then too fucking bad, it means that you really are a dumb fuck...


Vampyroteuthis infernalis's picture

Amen Seer! China is way bigger trouble than the US (which is still hosed).

StychoKiller's picture

My crystal ball sees Tokyo residents migrating to those "Ghost In the Shell" cities...

A Man without Qualities's picture

What they means is we copied the models you sent before (and thanks for the initial discount), so now we can make our own....

ExpendableOne's picture

That be it.  Just ask the Russian defence industry how this works.

3.7.77's picture

China doesn't care, wait until they say FU USA.

disabledvet's picture

they did pretty good in 2008 although interestingly it involved not devaluing their currency thus causing an immediate flight to the USD and the annihilation of Europe.  I'm unclear if "that was the plan" even now.  Anywho...with nukers blowing up i imagine "they had to do something to stop this rampaging American beast-man of alternative energy." 

Elk peanus's picture

my 2009 brokerage statement is littered with corpses of expired AMSC puts.  BTFD, anyone?

depression's picture

BTFD not this tiem coz QE-3 ain't coming guize

Japan criticality + China implosion gonna suck everything and everyone into a black hole with them

Good news for the dolla tho

DoChenRollingBearing's picture

Mish and Pettis have been all over China's current implosion.

China will not take over the world!   They always mess up when they are on the verge of greatness.  Communist Dynasty will be the same aas the others...

Seer's picture

Everything BIG will fail.  The reason BIG will fail more spectacularly is because its increases in consumption are much bigger.  China's collpase was easy to spot, that double-digit growth was going to burn itself out in short order: anyone/any system doing the same would meet the same consequences.

I'd argue that they "are on the verge of greatness."  People confuse greatness with the speed at which a society is rushing toward the abyss.  "Spectacular," perhaps, but "greatness" isn't a word that I'd think is meaningful in this context.

Bleeping Fed's picture

When were they on the verge of greatness?

vote_libertarian_party's picture

What does this say about GE.  They are big in this area aren't they?

Cursive's picture

Obama and Congress will find dome way, war of otherwise, to line GE's pocket.

Seer's picture

Junked?  I'd like to know why...

But, perhaps it's the other way round, perhaps GE will find some way of getting the politicians to help do their bidding?  That's how Boeing gets its airplanes sold: via international "diplomacy."

Mad Max's picture

I think we need to go search for WMDs in China, what with this and the daily stock exchange blowups of apparently pure-fraud Chinese companies...