(For other news from the Reuters Global Energy Summit, click here)
* Comverge CEO sees annual revenue growth of 30 pct plus
* Open to partnership in China
* CEO says sale of company possible
* Looks to close offices, outsource to cut costs
By Ernest Scheyder
HOUSTON, May 24 (Reuters) - Comverge Inc’s COMV.O chief executive expects his energy management company to make a profit by 2013, helped in part by cost cuts -- including office closures and possible outsourcing of some operations.
While Comverge expects to increase revenue more than 30 percent a year, its results have failed to impress investors, who have pushed its stock down 13.4 percent so far in 2010. Last month the East Hanover, New Jersey-based company posted a wider-than-expected first-quarter loss. [ID:nSGE6490NL]
Despite pressure from Wall Street, Chief Executive R. Blake Young told the Reuters Global Energy Summit in Houston he wants to get revenue to a “sustaining level,” and while he won’t let the push for short-term profit dissuade him, he sees profit “within three years.”
“We’re not going to do anything goofy to appeal to the quarterly interest” in profitability, said Young, who became CEO in February. “But it doesn’t take a lot of number crunching to project that there is an inflection point in the not-so-distant future.”
Young declined to say what level of revenue would be needed to hit that goal, but he stood by Comverge’s forecast for 2010 revenue of $125 million to $137 million against about $99 million in 2009.
The company, which went public in 2006, helps about 500 utilities across the United States curb power demand during peak use times, especially in summer months when air conditioners are widely used. It also helps monitor residential power usage and helps utilities contain power consumption at commercial clients such as Best Buy (BBY.N) and Wal-Mart (WMT.N).
The smart grid -- which would boost efficiencies along thousands of miles of power lines, bolster renewable energy projects, and increase the need for data integration software and communications systems between utilities and consumers -- is seen as a major growth area for the company. Comverge is also working on a high-tech thermostat that would give consumers greater control over their energy use.
To reach his profit goal, Blake expects to cut the number of corporate offices to “a lot fewer” than the four it has currently, keep cost increases to about 10 percent to 15 percent a year and work with utility customers to maximize U.S. federal stimulus funds.
It may also outsource its operations to install monitoring devices with utility company customers.
Comverge has been looking to partner with an overseas utility, especially in emerging markets, where electrical grids and buildings are being developed at a fast pace.
A partnership with a Chinese utility to supply technology to manage peak power demand would be ideal, Young said.
“We see international expansion as a potentially significant growth opportunity,” he said.
Still, he said, “We wouldn’t send 10 people to the United Kingdom and say, ‘Call us when you have revenue.'”
Comverge is “looking, but not leaping” at small acquisitions but would need any deal to boost earnings immediately, Young said.
And given Comverge’s technology and relatively small market cap, the sale of his company is “possible,” he said.
“The board’s interest is to continue to grow the company,” said Young. “We think we’re on the right path.”
For more on the Reuters Global Energy Summit, see [ID:nSGE64N1I1] Reporting by Ernest Scheyder; Editing by Steve Orlofsky