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Echelon Corporation |
Your post is valuable and informative. I have been observing this
stock for several years now, since the decline of the ENEL contract.
That contract provided a spike in the stock and revealed the potential
in the product. I noted multiple insder sales in the stock's recent
climb to $32, and zero buying at current levels. I find this
surprising because energy prices continue to climb making the case for
smart controllers more compelling. If those managing the company
noted traction for their products, it seems odd they would not
increase their position.
But the fact that this stock seems at a discount to its potential
valuation given its recent precipitous drop, its narrow float, and its
relative unknow status to the market, this might be the time to by. I
am considering a position as well, and your comments help frame the
industry environment. Based on your comments, it sounds as though you
see LON works as very competitive. The fact that it works every time
seems much more compelling than another product that has extra
trappings but compatibility problems.
I am interested if you consider ELON's product upgrade cycle
competitive. Do they have the capital/resources to consistently out
innovate the competition, or have you noted them falling off compared
to competing manufacturer's products?
> 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?