NGI The Weekly Gas Market Report / NGI All News Access

Avista Hits the Technology High Road

January 24, 2000
/ Print
| Share More
/ Text Size+

Avista Hits the Technology High Road

Avista Corp., based in Spokane, WA, got on board the technology stock express last week as Washington state neighbor, Bill Gates took a 5% stake in the company and Avista's stock price just about doubled.

Analysts said the Microsoft chief's investment likely was spurred by the internet link to subsidiary Avista Advantage, an on-line bill management service, and Avista's budding enterprise in the suddenly blossoming fuel cell market.

Avista's stock price went from about $24 on Wednesday to close at $46 3/8 after Gates' private investment company, Cascade Investment LLC of Kirkland, disclosed to the SEC it had taken a 5.01% position in the stock, putting him among the top 10 investors in the company.

The move coincided with a sudden Wall Street interest in fuel cells, principally in Plug Power, a three-year old venture co-founded by Detroit Edison's parent, DTE Energy, and Mechanical Technology. Plug Power's stock price leaped 48 points from about $60 last Wednesday to $108 Friday. The company went public in November at about $20 share. Sempra Energy's SoCal Gas also has invested in Plug Power, which has signed on General Electric to distribute residential-sized generation units.

An Avista spokesman confirmed his company is looking at spin-offs over the next year or so to maximize shareholder value, first of its more mature venture, Avista Advantage and then its fuel cell arm, Avista Labs. It has not been decided what form the actions will take. The company reportedly is entertaining offers from backers for its fuel cell unit, which is expected to go into production in early 2001.

Avista Labs, like Plug Power, is developing PEM (proton exchange membrane) fuel cell systems that turn oil, propane or natural gas into hydrogen for electric power generation without combustion (or pollutants) for homes and small businesses. Avista Advantage provides energy information and utility billing services to thousands of commercial customers over the internet. (See NGI, May 31)

Avista CEO Tom Matthews was brought in from the Houston gas community less than two years ago to direct an all-points push of the northwestern utility, formerly Washington Water Power into unregulated ventures. He appears to be bringing in some winners along with a previously announced loser.

The company recently announced it was abandoning one strategic initiative, the push to develop a nationwide energy marketing unit. In the face of disappointing results Avista is scaling back to a regional marketing focus. It has put Boston-based Vitol Gas & Electric, which it acquired in December 1998, back on the market, at the same time warning investors to expect some disappointments in its fourth quarter results (See NGI, Nov. 29)

The fourth quarter notwithstanding, Friday an Avista spokesman said the company was "pleased that many investors are starting to understand the strategy that CEO Tom Matthews put forward. Part of that strategy is to increase and drive shareholder value and it's paying off."

"We are in a multi-year process of transforming our company from a regional utility into a national energy, information and technology company. In meeting our objectives, we will likely continue to see some quarter-to-quarter earnings volatility in the near term. Whether the analysts like it or not, I cannot be worried about quarter-to-quarter earnings, but I am worried about where I'm going to be in three years," Matthews told NGI in an interview last July.

Ellen Beswick

©Copyright 2000 Intelligence Press, Inc. All rights reserved. The preceding news report may not be republished or redistributed in whole or in part without prior written consent of Intelligence Press, Inc.

ISSN © 2577-9877 | ISSN © 1532-1266
Comments powered by Disqus