Itron CEO sees no more federal smart grid dollars

LOS ANGELES Wed Mar 16, 2011 11:44am EDT

LOS ANGELES (Reuters) - Utility meter maker Itron Inc does not expect the U.S. government to deploy any more funds to develop the so-called smart grid, Chief Executive Malcolm Unsworth said in an interview.

In the last two years, the $787-billion U.S. economic stimulus package gave a crucial boost to the smart grid, which aims to make the power grid more efficient.

Those funds helped speed adoption of advanced electric meters, which allow households to more closely monitor their usage while also sending data back to their power providers. But Itron isn't banking on any more help from the federal government -- and said it doesn't need it.

"From a federal government standpoint they've done a substantial amount," Unsworth said. "I don't think that they are going to be putting anymore stimulus plans in place, which is very helpful for Itron."

Rollouts of Itron's smart meters "have always been done because of solid business cases," Unsworth said, adding that "there is enough momentum today without the need for the federal government to put anything in place."

In the United States, California, Pennsylvania and Texas utilities are already swapping out old meters for new, advanced ones. Unsworth expects other states to follow suit.

Investors have worried about a slowdown in demand for Itron's products once stimulus dollars dry up, and the company's shares have fallen 37 percent since hitting a 52-week high of $81.95 last April. They closed at $51.98 on Tuesday.

But Unsworth said Itron's "activity levels have never been as high," and predicted that the company will "see much more coming forward in '11 and '12 and moving forward, especially in Europe."

Itron will benefit from EU energy laws that have encouraged member states to switch to smart meters, Unsworth said.

Demand is particularly strong in the United Kingdom, France, Spain and Italy, Unsworth said, adding that Itron enjoys about a 20-25 percent market share for electric meters in Europe.

Last month, Itron posted a quarterly profit that missed Wall Street estimates, due in part to lower-than-expected margins.

On Tuesday, Unsworth said he reorganized the business to increase profitability, but said it would not happen overnight.

Itron could make some small, "tuck-in" acquisitions to drive growth in certain segments and markets, but Unsworth would not comment on specifics.

(Reporting by Nichola Groom, editing by Bernard Orr)