Indian orders push Plug Power closer to profitability

Latham, N.Y.'s Plug Power (Nasdaq:PLUG) said today that it has taken a significant step toward becoming the premier telecommunications fuel cell supplier in India.

The company reported its second-quarter 2009 results today, including revenue of $3.2 million, down from $4.8 million in 2008. Plug Power said today that it reduced net loss for the second quarter to $10.3 million, or $0.08 per share, from $22.9 million, or $0.26 per share, in the same period of 2008. Operating cash burn for the quarter was $8.5 million, down from $12.8 million in 2008.

Company officials and analysts regarded the news as positive, noting that Plug Power is continuing cost controls as it grows its customer base in India. The company has a 2009 target to reduce net cash used for operating expenses to between $38 million and $42 million for the full year (see Plug Power stock dives in response to layoffs). Shares of the company were down 1.2 percent to $0.81 at the close of trading today.

Plug Power revealed last week that it signed a deal to supply 200 fuel cell units to power cell towers in India in a deal with Wireless TT Info Services, the tower arm of Tata Teleservices. Tata Teleservices is part of the Tata Group, India's largest conglomerate. Tata Teleservices, which does business under the brand name Tata Indicom in India, says it has a subscriber base of 24.3 million, more than 9 percent of the Indian market. Plug Power completed a field test in rural India with Tata Teleservices and Hindustan Petroleum last year (see Plug Power tests fuel cells in India).

Including the Tata deal, Plug Power received orders for 255 units in the quarter. The company shipped 13 units in the quarter, ending with an order backlog of 526 units as of June 30.

A report from Thomas Weisel Partners analyst Jeff Osborne today said Plug Power is positioned for a strong second half of 2009 and strong 2010. Thomas Weisel has a 12-month price target of $1 for Plug Power.

"Plug Power is beginning to move past the development and testing phase with many of its customers signaling they are on the cusp of real volume orders that could lead to profitability," Osborne wrote. "We continue to believe the next catalyst for the company will be the detailing of their path to profitability."

Plug Power plans to announce its path and timeline to profitability in the fourth quarter.

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