Echelon sees revenue trending up in 2010

Ken Oshman, Chief Executive Officer of Echelon, listens to a question during the Reuters Global Climate and Alternative Energy Summit in San Francisco, California, September 9, 2009.

SAN FRANCISCO (Reuters) - Echelon Corp will start to see its revenue rise again in 2010, but 2009 will be a down year for the maker of smart meters, Chief Executive Ken Oshman said on Wednesday.

"I would be surprised if 2010 would be down from 2009," Oshman told the Reuters Global Climate and Alternative Energy Summit in San Francisco.

Echelon's revenue fell to $134 million in 2008 from $137.6 million the previous year. In 2009, revenue during the first half fell to $40.8 million from $67.7 million in the year-ago period.

The San Jose, California-based company would break even at an annual revenue range of $150 million to $160 million, Oshman said.

"That (revenue) is not distantly out of sight," he said.

Echelon has been hurt by U.S. recession and slow global economy, with many of its utility customers putting off or canceling programs to upgrade their meters.

Echelon's smart meters allow households to monitor electricity usage while sending data back to power providers.

Oshman said the company is not going to scale back its investment in research and development or dial back its sales and marketing expenses just to be profitable.

"We are right in the middle of the transformation of the world to save energy," he said. "This would be the worst time to back off of investing."

Once the economy improves globally, Oshman said, the smart meter sector would see consolidation.

"The big guys 5 to 8 years ago, who owned metering companies, decided it was a crummy business and sold them to private equity," Oshman said. "I could see GE or ABB or Siemens getting into this business again."

Utility companies around the world are laying the groundwork to upgrade their networks with smart grid technology, which measures and modifies power usage in homes and businesses, improving grid reliability.

Experts envision the smart grid as a network that will wring new efficiencies out of thousands of miles of power lines and open the door to more development of renewable electricity sources, the introduction of "smart" appliances that turn themselves on and off, and a fleet of electric cars.

In wide-ranging remarks, Oshman said the U.S. government's stimulus package for the smart grid sector would accelerate existing projects, for the most part, rather than create new projects.

(Reporting by Poornima Gupta; Editing by Richard Chang)