Highlights of Article and FinancialsThe article really is very interesting. Below are the points in the article that caught my attention because they went beyond the usual, though critically important, observations that RailPower's switchers have tested extremely well and have major cost, efficiency and environmental advantages. I supplement the list of points set out below with one statement which I found interesting in yesterday's financial release. Given the skyrocketing price of fuel, and the forecast that expensive fuel is here to stay, the imperative of RailPower's products is, in my view, becoming compelling.
Here are the points in the article and finacials that caught my attention, in some cases accompanied with my commentary:
- In the context of a discussion of potential Tier I railway customers, RailPower is said to be in "serious negotiations" with a
number of clients. RailPower "is expected to announce intitial sales to a class I Railway this year." Tier I sales have the potential to be rather substantial.
- We got more information about the number of potential sales this year. We know that RailPower has already sold 11 units. The Paradigm Report says RailPower's break even point is in and around 25 units. The article says that there are presently TERP applications for the subsidized sale/purchase of another 42 units and RailPower management is hopeful that half will be approved. If that does indeed materialize, setting aside any other sales, well that is 32 units. 32 units equals profitability.
- The competition is 2 years behind and aside from other barriers of entry into the development of switcher technology, a new standards barrier will challenge competitors beginning 2005. As of that date, switchers will have to be Tier 2 compliant. RailPower's units already are. The switchers produced by other very large competitors who manufacture switchers, GM, for example, are not yet Tier 2 compliant.
- Other RailPower products "are in the works", some of which could take PailPower into long haul or mainline applications.
- The company, according to the financials, is focussing on expanded applications of switcher technology to include "branch line, commuter and transit applications". This would give rise to a massive expansion of the market for hybrids.
- This is the first time I've read about RailPower management talking about RailPower being a takeover target.