aarondavidsm...@gmail.com

If you've read some of my previous discussions, you'll know I advocate
shorting Echelon if it has any major price spikes (as it did the day
of Q4 earnings release last week). I have a sneaking suspicion there's
a Jim Cramer-type hedge fund manager out there manipulating this
little-followed stock like mad. Having said that...

What the hell is wrong with this company?! How do they piss away money
quarter after quarter, year after year? I've worked with two major
HVAC controls companies so I have an intimate knowledge of Echelon's
product and have used it for the past 5 years. There are two major
open control systems used by all HVAC control companies: BACnet
(ASHRAE standard) and LON (developed by Echelon). I like LON much
better simply because it truly is "open". It infuriates many people
because it's so constraining - all you get are SNVTs and LNS server -
but I like that because it means I know I can talk to any LON device.
As long as it's got SNVTs and I have LNS server, we're in business.
BACnet is of course being pushed hard by the HVAC controls industry
because it's not controlled by one company, but so far I find it very
poor on the "openness" side. You might as well flip a coin to
determine if you can talk to a competitor's controller.

So here's Echelon - sitting on a gold-mine of a market and yet they
can't seem to turn that into any real profits. I keep hearing stuff
about China and energy metering in their press releases. Why don't
they work on getting a neuron chip in every HVAC controller? BACnet is
still in its early stages for being an industry standard, if Echelon
can come out on top, the rewards would be enormous.

The interesting thing is their LonTalk protocol practically sells
itself. I've worked on several government jobs that required an open
system so the customer wouldn't be locked into one controls company
and BACnet wasn't allowed because it wasn't deemed open enough. I
don't own any stock but am thinking about doing so just to get their
annual report to see where all the money's going! (And don't get me
started on #%@!ing non-GAAP profitability).

Any thoughts?