Small Talk: Clipper struggles as investors put returns above good intentions
Monday 09 March 2009
Green energy is a great idea. The problem for both those trying to produce it, and other businesses serving the nascent industry, is that investors will not support a company simply because it is doing the world a favour.
The analysts pore over the green group's results and market updates in exactly the same way as any other and if there is any sign of weakness, sell notes are sure to follow. Take Clipper Windpower, the AIM-listed company that makes turbines for windmills.
Clipper's share price has fallen by 85 per cent in the last 12 months as analysts have suspected that for various reasons there are better ways for investors to make returns.
In its trading statement at the end of last week, Clipper said: "The current economic and credit conditions in global markets, coupled with lower energy prices, are resulting in reduced capital expenditures by the company's customers and delays in the timing of turbine deliveries. Accordingly, Clipper is planning approximately 15 per cent to 20 per cent lower production levels for 2009." A loss is now expected for the second half of 2008.
The group produces a vital service for the protection of the environment. While it is true to say that Clipper is itself motivated by profit, the fact that investors are getting as far away from AIM as possible is undoubtedly having a knock-on effect on green energy development.
Armor has sights on death-ray defence
It may sound like comic-book science fiction, but plans are afoot for the military use of a death-ray laser that will be able to zap an enemy to dust from several miles away.
While it may take time for the technology to be used in anger, it has already been developed by the US aerospace giant Boeing, which has fitted such a weapon to a C-130 Hercules military cargo plane, calling its cannon the Advanced Tactical Laser. The laser can be fired up to 20km and would employ 100 kilowatts of energy.
Thankfully, Armor Designs, the US-based AIM-listed defence group, reckons it will eventually develop the means to protect those targeted by the laser. It went into production earlier this year, making personal armour designed to protect the police and soldiers caught in gun battles. It has so far targeted police forces in Latin America tackling armed drugs gangs. The next stage will be to produce vehicle armour for protection against improvised explosive devices in the likes of Iraq and Afghanistan.
But executive chairman James St Ville, the scientific brains behind the operation, reckons Armor has the technology to develop a shield that protects against the effects of the laser. Armor's stock is up 10 per cent on a year ago.
Number of companies leaving AIM rises amid economic woe
AIM, the market that allows everyone to make money in the good times, is starting to struggle to keep its allure. Very few small-cap companies are able to raise any money, either through initial public offerings (IPOs), or through secondary fund raising, as investors fret about putting their cash into anything that is not a secure large-cap business with clear revenues.
According to a survey by the accountancy group Baker Tilly and the law firm Faegre & Benson, 67 per cent of institutional investors think that it will take at least another year for the market to recover.
There can be very little point in small but ambitious privately owned groups listing on AIM, given the costs involved and the lack of money available. There is little liquidity and almost the entire market is trading down.
On Thursday and Friday last week alone, at least six companies ceased trading on the market, and while that may be a drop in the ocean compared to the overall list of companies on AIM, the number leaving the market is steadily on the up.
A spokesman for the London Stock Exchange, which runs AIM, said: "Current economic conditions are tough for every equity market, and, because AIM is a growth market, perhaps it is more adversely affected. We do get a bit frustrated, however. When a big company like Woolworths struggles, it is down to the company, but when it is a small company, it is because of AIM."
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