RE: Down Round in Up MarketMy view is quite the opposite of yours industrial.
Let's see what the appetite is for the current round of financing. Given the economy of the last three years, I don't see institutions lining up to provide $12.5 M unless they think that RailPower has a really good shot at being successful. Demonstration units have to be paid for and it seems entirely implausible for the Board of RailPower, including Mr. Richardson, to want as many demonstration units as is apparently being ordered unless there are compelling reasons. I think the Board believes that the product will sell itself and that RailPower is at the beginning stages of a serious commercial rollout that will gain progressive steam. The pilots to this point have been very successful, though as pilots are apt to be, they have also been a learning experience. The company has developed its product in the most strategic way. It has essentially partnered with the Rail industry and in particular its biggest player, UP. Its products are designed to replace a very large number of old, inefficient and highly polluting diesel switchers with highly efficient, low cost and environmentally very friendly replacement products. There really is not a lot of competition out there for the space that RailPower is targeting. I think we will see commercial orders, initially in dribs and drabs, but with the pace of the orders increasing progressively and significantly over the next couple of years.
The EMG analogy, in my view, is not convincing. The electronic manufacturing sector crashed, both the Celestica's of that sector and baby companies like EMG, when the econonmy crashed. The EMG market was enormously competitive, though attrition has made it a lot less so these days. RailPower's basic tech, at least its hybrid switcher tech, is pretty refined and so there shouldn't be a lot of burn in further developing that product. RailPower's hybird product is not going head to head with any other mature technology that targets the replacement of the old, stinky and expensive hybrid fleet.
One of the great things about the market is that we will see who is right.