(Recasts with details from conference call, adds analyst comments)
VANCOUVER, British Columbia, Oct 30 (Reuters) - Faced with tough equity markets to fund development of fuel-cell technology, Ballard Power Systems Inc. said on Wednesday it will focus on saving money and concentrate on products that are close to reaching the market place.
Ballard reported a doubled third-quarter loss on Wednesday due largely to money-losing acquisitions and foreign exchange losses. The results were in line with analysts' expectations, and the company reaffirmed its 2002 sales and expenses forecast.
The firm has been a leading developer of alternative energy technology, but with most products that will use its fuel cells still in the pre-commercialization stage officials said they wanted a tighter focus to the business plan and to "significantly decrease cash consumption."
The one-time stock market darling has been battered of late by concern about its spending levels on development. Ballard has said it has enough cash to carry its pre-commercialization plans though 2004, but also expects to raise money through a share offering before then.
"We are confronting the realities of the market place. The changing investment climate has emphasized the need for sustainability in order to accommodate the existing automotive commercialization timetable," Dennis Campbell, the company's new chief operating officer told analysts.
Fuel cells, which produce electric energy from hydrogen through a chemical reaction, are being developed as an environmentally friendly alternative to gas-burning internal combustion car engines.
"Necessity is the mother of invention here, I think ... now, the stock market hasn't been particularly co-operative with their vision of the long-term plan to raise funds as was required," analyst Andrew Bradford of Raymond James said.
Bradford said he was keeping his "underperform" rating on Ballard's stock, saying the lack of details on how they plan to cut costs made it difficult to judge the impact on the company's efficiency at bringing products to market.
The company said on Wednesday it will "selectively" translate its technology into products with a quick payoff that will expand its customer base and lower component costs.
Ballard also suspended development of a 60-kilowatt stationary generator pending further development of the automotive fuel-cells system on which it is based, a move it said will "significantly" cut development costs with a minimal impact on revenues.
Ballard is also looking to sell or license its fuel- processing technology operations, in part, because fuel-cell users appear to be focusing on pure hydrogen as the best energy source for the cells.
Hydrogen can be derived for a variety of sources, such as gasoline and methanol, a task carried out by the processing equipment.
For the quarter ended Sept. 30, Ballard posted a loss of $40.2 million, or 38 cents a share, compared with a loss of $20.3 million, or 22 cents a share, in the year-ago quarter.
Ballard said $14.3 million of its loss stemmed from acquired businesses, such as Ecostar Electric Drive Systems, and $3 million was from integration and restructuring costs.
Sales in the third quarter surged 189 percent to $28 million from $9.7 million.
It also repeated its forecast of a cash burn of between $122 million and $142 million, plus an additional $36 million related to integration activities.
Shares in Ballard gained on Wednesday, adding 66 Canadian cents to C$17.06 in Toronto, and 47 cents to $10.939 a share on Nasdaq. The stock has traded in a 52-week range between C$61.30 and C$10.55 in Toronto.
($1=$1.57 Canadian)