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Friday, March 18, 2005

Altair: Fooling the Fools?

Yesterday, The Motley Fool ran an article on Altair--which I profiled last week. The authors, Carl Wherett and John Yelovich, saw fit to "consider [Altair] ... a rule breaker." To their credit, they didn't recommend the stock but I think they did their readers a real disservice by suggesting that Altair has had some "stunning breakthroughs" in the past few months.

Specifically, the authors suggested that Altair's licensing of RenaZorb to Spectrum Pharmaceuticals was one such breakthrough. I respectfully disagree. I simply remind my readers that RenaZorb is still years away from FDA approval and that Spectrum Pharmaceuticals is hardly a world-class company--it doesn't yet have any revenues.

Secondly, the Motley Fool writers seemed to be far more impresed with Altair's lithium-ion technology than I am. I would argue that Matsushita, given the size of its marketing and distribution network, is far better positioned to be the first to get its lithium-ion technology into the commercial marketplace. This is not to say Altair can't find another major battery manufacturer to license its technology--it's just that the company's previous track record on successfully introducing its products into the commercial marketplace (e.g. NanoCheck) offers little reason to be confident.

In conclusion, I would simply remind my readers of this fact: Altair had only $1.2 million in revenues in 2004, while piling up $7 million in losses. It is impossible for me to justify a market capitalization of $200 million for a company with such miniscule reveneus, no real product yet, and an unproven management team. (Full Disclsoure: I own no stock in Altair.)

Related Links:
Is Altair all Hot Air?