Patient and long-suffering investors in Liquidmetal Technologies are anxiously awaiting announcement of the company’s fourth quarter earnings next week. Many had bought soon after the company went public in 2002 at close to $20 a share, buying into the hype that the amorphous metals technology—stronger than titanium—could quickly gain commercial success. Stock prices soon dove into penny stock territory and prices opened at 8 cents per share this morning.
LM gave up key licensing rights to Swatch and Apple in an effort to raise capital and stay solvent.
The technology was originally developed at Cal Tech, but has been slow to catch on because it is so innovative. Design engineers tend to be conservative and like to stick with what they know works. Development cycles are long. The technology is so disruptive that materials’ substitution is not a realistic option. Parts generally must be designed from scratch to take advantage of the strength and elastic properties of the zirconium-based alloys. Liquidmetal offers great potential in particular for components subject to strong mechanical strain with high demands on component design and surface quality. Another issue is that big companies want backup sources.
The company has derived revenues primarily by supplying prototype parts, and third quarter revenue was just $42,000, down from $97,000 during the third quarter of 2014. Gross margin was a negative $118,000 compared to $12,000 in the third quarter of 2014.
Company officers give glowing reports on requests for quotes and visits to company offices, but investors are tired of the hype.
Compared to developments in the previous 14 or so years, however, there are a few recent positive signs.
- Partner Engel has developed an injection molding machine that processes Liquidmetal and has been holding forums in Europe to attract interest in a market that has historically been more open to technical change than the United States. About 25 percent of LM’s new RFQs are coming from Europe. The injection molding machines, robots and system solutions from Engel had previously been solely for processing polymeric material. Engel is now working to develop overmolding in which Liquidmetal could be combined with plastics or metal inserts in a single continuous process.
- Liquidmetal recently received a production order for a medical device component from CoNextions, a medical device developer and manufacturer. Surgical devices are a key target market for LM because they require high quality metal components and are less price sensitive than, say, automotive parts. In another recent announcement, Liquidmetal has entered into a development agreement with Martin Guitar to design a guitar component.
I think progress at LM will continue at a glacial pace. But as long as the company has access to adequate working capital, it will offer an important new materials’ option to design engineers, particularly in the medical, electronics and aerospace markets.