AMSC jumps after a victory in trade secrets fight
AMSC gets a small victory in its long fight with former Chinese customer; stock jumps
NEW YORK (AP) -- Shares of American Superconductor Corp., a renewable energy company that has been battered for more than two years because of complications with what once was its largest customer, a Chinese company called Sinovel, rose on Friday after the Justice Department accused Sinovel of stealing AMSC's trade secrets.
THE SPARK: The Department of Justice on Thursday accused Sinovel Wind Group, which is China's largest wind turbine manufacturer, of stealing proprietary wind turbine software from AMSC. Sinovel is also accused of using that software code in four Sinovel turbines in Massachusetts — near AMSC's hometown of Devens, Mass.
Beijing-based Sinovel did not immediately return a message left Friday morning.
THE BACKGROUND: AMSC said it started working with Sinovel in 2005, providing design, engineering and other services to the Chinese manufacturer. AMSC says that in March 2011, Sinovel broke "multiple contracts" by abruptly refusing to accept electrical components and spare parts for wind turbines that AMSC had shipped to it. A few months later, AMSC says, it discovered that Sinovel was also using stolen AMSC trade secrets and intellectual property that it had obtained with help from an AMSC employee.
THE EFFECT: The effect on AMSC was devastating. The stock has lost more than 90 percent of its value since AMSC first revealed that Sinovel had refused to accept a shipment. It has recorded annual losses for the past three years, has spent millions on litigation, and has laid off more than half its employees.
THE BIG PICTURE: In a strongly worded statement, AMSC CEO Daniel McGahn called Sinovel's actions "egregious and unlawful" and called for the White House and Congress to re-evaluate the U.S. trade relationship with China. The company's news release Thursday also included a statement from Elizabeth Warren, the well-known Democratic senator from Massachusetts. "We must get tough on those foreign companies that steal American ingenuity," she said in the statement.
SHARE ACTION: The stock was up 34 cents, or more than 14 percent, to $2.68 in midday trading. The stock has traded between $2.12 and $4.96 over the past year.
