I Give You The Next Microsoft...
And You Can Charge It!

By Joseph E. Witzman and Joanne M. Rodriguez
February 2000

This article shares the investment experience the author and lecturer on personal finance, Professor Joseph Witzman. A real estate developer, corporate CEO, and retired college professor, Witzman is an innovator in sales and marketing for the hotel industry. He has been listed in Who's Who in California and Who's Who in the World and recently, the University of Minnesota selected him as one its most distinguished alumni.
Joanne M. Rodriguez, the co-author of this article, is a freelance writer who works with Professor Witzman as a public relations and marketing consultant.

A stock pickers fantasy – picking the next Microsoft.

The dawn of a new millennium presents a wonderful opportunity for prudent investors to reflect on the past, and project into the future of their portfolios. January 2000 investment publications offer savvy advice for fortune hunters seeking the next hot prospects in the seemingly never-ending, ever-charging bull market. The search is on, but not without parameters.

Recently, Wealth Manager magazine, a Bloomberg Communications publication challenged its Natural Investors to "go one step beyond" normal investment search strategies to pick the next Microsoft. It suggested that research focus on small-cap, emerging companies with the potential of not only financial success, but also the ability to produce goods and services which will "make a positive contribution to our world."

Now there´s an idea whose time has come! The fortune hunters of the 21st century must have a conscience, and their stock picks must be both money-wise and earth-friendly. Wealth Manager projects that the next Wall Street winners will be "Green" investors who pick companies which can solve environmental issues by dealing in renewable energy, i.e. clean transportation, fuel cells (hydrogen), and solar power. Who are these future-FORTUNE 500s?

By focusing on the keywords: renewable energy resources, this motivated stock prospector quickly unearthed a mass of data. The United States Department of Energy and The National Renewable Energy Laboratory (NREL) currently conduct research in advanced vehicles (hybrid and electric vehicles), hydrogen fuel cells, photovoltaics, and solar manufacturing. Many well-known corporations such as General Motors, Ford, and Chrysler, as well as a number of smaller firms, work closely with NREL, using these state-of-the-art technologies. Among the smaller firms, research reveals one well-veiled game-changing player poised to transform the future of the planet with its patented technologies in renewable energy.

Hidden away on the NASDAQ, behind unimpressive annual reports, unresponsive Wall Street relations, and a dismal trading history, lies a sleeping giant. My choice for Wall Street´s next Microsoft? I give you Energy Conversion Devices Inc. (ECD), a company whose technology seems to completely dominate the future of renewables. ECD offers a stunning array of "game changing" core products such as: hydrogen storage (fuel cells), nickel-metal hydride batteries, and photovoltaics.

As the rest of the world catches up to the concept of renewables, Energy Conversion Devices Inc. seems destined to become a behemoth energy powerhouse. Fortunately for Wall Street´s bargain hunters, the speculators have been too busy buying "hot air" on the information super-highway to notice the real potential of this sizzling prospect. The sound prospects of ECD have never proven to be a tough "cell" for this enthused investor, who for a number of years, has made it number one in his portfolio. ECD´s forty years of research and development, and the ingenuity of almost one thousand patents can be had, at this writing, for the amazingly low stock price of less than $20 a share. However, like its stock price, the products and prospects of this sleeping giant will soon rise to the occasion, answer the call for its patented technologies, and turn speculation into lucrative fiscal reality.

Hydrogen: The ultimate fuel of the future

If renewables promise to be the investment play of the next century, then hydrogen fuel cell technology may prove to be the hottest play of all. The 21st century vision of NREL is to create a society powered almost entirely by hydrogen, a colorless, odorless gas that accounts for 75% of the earth´s mass. When hydrogen is used as an energy source, it generates no emissions other than water, which is recycled to make more hydrogen.

Environmentalists and automakers acknowledge hydrogen to be the ultimate fuel for the future. Even oil companies are jumping on the bandwagon, investing millions of dollars into fuel cell research. Wealth Manager reports that General Electric is "hot on fuel cells," while working on a plan to introduce home fuel cells this year. The January 2000 annual meeting of the North American International Auto Show premiered General Motors´ answer to the call for alternative-fuel vehicles. GM introduced the Precept, a prototype mid-sized car using advanced hydrogen fuel-cell technology. This vehicle offers fuel efficiency of up to 100 miles per gallon!

The October issue of Time magazine identifies the star-class performers in the upcoming age of hydrogen as Energy Conversion Devices Inc. and Ballard Power Systems. Both companies are slugging it out, toe to toe, for a leadership role in the technology. Top management from these industry leaders were recently invited to Great Britain to be keynote speakers at a world conference discussing hydrogen and fuel cells as possible solutions to future energy needs. ECD has been working on hydrogen storage materials for several decades, and the company now has the enabling technology to speed the world´s transition to hydrogen fuels. ECD has successfully researched solid hydrogen storage systems as an alternative to onboard reforming of natural gas or methanol to obtain hydrogen. In a 1999 letter to stockholders, Ovonic (ECD) reports that its new proprietary alloys that store hydrogen in a solid state solve the current fundamental problem of storage, kinetics and infrastructure. This means that the hydrogen to power the vehicle can be stored as a solid in a fraction of the space previously required for storage in a high-pressure gaseous system. This state-of-the-art technology will accelerate ECD´s rise to the top of the fuel cell heap faster than you can say "SO LONG FOSSIL FUELS!"

Hybrid Electric Vehicles:
Heading in the right direction

These are exciting and yet traumatic times for the American automobile industry. The smog-belching internal combustion engine is going the way of the dinosaur that powered it with fossil fuel. In spite of some reluctance on the part of a threatened auto industry, the race to produce emission-free vehicles is well under way. Japanese automakers have already forged ahead into electric and hybrid electric vehicle production. NREL now reports that the new Hybrid Electric Vehicles (HEVs), like The Precept, will be common on our roads by the year 2003. The Wall Street Journal (October 19, 1999) heralded General Motors´ push on its development of "green" cars. Using either electric or gasoline power, the new HEVs offer the performance and driving range of conventional vehicles, with the fuel efficiency and low emissions of electric vehicles.

Notwithstanding these new hybrid vehicles, the "greenest" vehicles of all are the all-electric vehicles. Traditionally, all-electric vehicles have lacked the range and power of conventional automobiles. However, a new generation of batteries, the nickel metal hydride batteries (NiMH), have extended that range to over 250 miles on a single charge. Imagine driving from Boston to New York for less than the cost of a gallon of gas!

So who lies in wait to cash in on NiMH technology for both HEVs and electric vehicles? The dominant player in Nickel metal-hydride (NiMH) technology is Ovonic Battery, a subsidiary of Energy Conversion Devices, Inc. And the good news does not stop with energy efficient automobiles.

NiMH takes charge of rechargeables

Fortune magazine´s millennial issue offers advice on "The ten next big things...and how they´ll make you money." Promoting stock picks in the electronics market, the article explains that "by 2010, consumers will have a whole new array of must-own electronic gadgets." Who will benefit from the need to power these gadgets? You guessed it. Ovonic and ECD.

Earth-friendly Ovonic NiMH batteries were originally produced to replace nickel cadmium (niCd) batteries used in portable electronics such as laptop computers, digital cameras, and cellular telephones. Their superior performance, including money-saving rechargeable convenience, 70% more power, longer cycle life and no memory effect, has made them the battery of choice for all portable electronics aficionados. Published magazine test reports, state that four NiMH rechargeable batteries are equivalent to 2,000 disposable alkaline batteries when used to power the new energy-intensive digital cameras. Consequently, Digital Camera magazine´s recent market comparison described NiMH batteries as "the only way to go."

So bye-bye toxic nickel cadmium, alkaline, and even lithium! Consumers are finally ready to get "charged up" over NiMH´s earth-friendly rechargeables. Popular Science magazine reports that Energizer will soon unveil its "new line of NiMH rechargeable batteries in AAA, AA, C, D and nine volt sizes for cameras, portable music players, and kids toys." The current global market for the smaller, rechargeable batteries is $4 billion with reportedly over 780 million NiMH batteries sold in 1998. Ovonic Battery currently maintains licensing agreements with all significant manufacturers of consumer batteries, and more importantly, ECD receives royalties on its patented NiMH technology that go right to its bottom line.

A Bright Future in Solar Power

The future also looks bright for ECD in Solar Power. Revolutionary photovoltaic (PV) technology, the direct conversion of sunlight to energy, holds the key to solving the world´s energy problems. Solar supporters claim that the untapped potential of solar PV power could provide 10,000 times the worlds current energy needs, and it´s all free! Wall Street has seen the light, and corporations are jockeying for position in this expanding domestic and international solar market. B.P. Solar, Solarex, Siemens, Royal Dutch/Shell, and United Solar are among them. United Solar, another subsidiary of ECD, has established itself as the world´s pre-eminent PV manufacturer by leading the development of thin-film PV and producing the lightweight space solar modules installed on the MIR Space Station. Recently, Stanford Ovshinsky, founder and CEO of ECD, was awarded the Karl W. Boer Solar Energy Medal of Merit by the International Solar Energy Society in honor of his accomplishments in photovoltaics. Rumors now abound that United Solar´s advanced technology may be combining with the resources of the Royal Dutch/Shell Group in the construction of the world´s largest solar panel plant in Germany to produce 13 million solar panels annually.

A little closer to home, Wealth Manager describes how United Solar´s thin-film solar shingles can "turn an ordinary roof into a household power supply." Worldwatch, an international environmental organization claims that just one solar roof system could eliminate 34 tons of greenhouse gas emissions. With that in mind, President Clinton has created the "Million Solar Roof Initiative" to enable businesses and communities to install one million solar systems across the United States by 2010. The marketing potential extends to every household in America and worldwide. It´s hard for consumers to imagine not depending upon a local power company for electricity, but the technology exists to realize this dream. At home or abroad, with this kind of potential, United Solar (ECD) stock may just go through the (solar) roof.

ECD: Solving the Energy Crisis

The world market is catching on to the inevitability of renewables and Green investors are leading the way. Will ECD become the next Microsoft? If solving the energy crisis through earth-friendly energy production were the winning criterion, then the answer is yes. Years ago, Microsoft was poised to cash in on the needs of the information age. Today, ECD is poised to meet the energy needs of our posterity with environmentally-safe products and patented technologies. No other company has the innovation, diversity, and creative genius of the "dream team" assembled by Stanford Ovshinsky, founder and CEO of Energy Conversion Devices, Inc. Its top corporate management roster looks like a Who´s Who of executives from the automobile and high-tech computer industry. Surprisingly, energy production is just half of the ECD portfolio. More "game changing" products and patents in information technology are currently impacting the computer industry as deeply as nickel-metal hydride has revolutionized rechargeable batteries. How, you ask? That´s another Bloomberg challenge for another day. Meanwhile, take this stock pick to the bank...and you can "charge it."


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