Just last week, A123 Systems Inc. (NASDAQ: AONE) filed a notice with the US SEC regarding the company’s ability to continue as a “going concern.” Nothing much has changed for the company since then, but today a company spokesman said that A123 plans to hire up to 400 new workers at the company’s two plants in Michigan. The new employees are expected to be hired at the rate of about 100 a month.
When A123 filed its “going concern” notice, it also said that it was “actively engaged in discussions with strategic partners for substantial investments in the Company.” Perhaps such an investment is at hand, but there was no mention of that in today’s announcement. A123 has contracts to build lithium-ion batteries for General Motors Co. (NYSE: GM), Fisker Automotive, and BMW. The company also received a federal loan to build a new plant to make batteries for the Leaf from Nissan Motor Company Ltd. (OTC: NSANY).
Whether or not A123 is getting any kind of cash infusion from a strategic investor is likely to determine the fate of the company. Absent a sugar daddy, the company simply appears to be too weak to survive. Hiring more people it can’t afford to pay out of operating revenues is not a solution.
Shares of A123 are up about 1% at $1.00 in a 52-week range of $0.82-$5.91. Volume is thin, though, at about 450,000 shares traded compared with average daily volume of 2.9 million.
Paul Ausick
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