AMSC (AMSC.O) said it laid off about a quarter of its workforce and forecast a larger-than-expected loss for the current quarter as the power technology company struggles to stem losses caused by overcapacity and weak demand in the wind power market.
The company, which has cut more than half its workforce since August 2011, now has only about 340 employees.
The maker of electrical components for wind turbines expects a loss of "less than 31 cents per share", excluding items, for the third quarter ending December. It earlier forecast a loss of less than 26 cents.
AMSC is trying to recover from losing its biggest customer, China's Sinovel Wind Group (601558.SS), in 2011, but a weak global economy and piled up inventory have kept progress at bay.
The Devens, Massachusetts-based company's shares, which fell as much as 11 percent, recovered to be down 7 percent at $2.58 in early afternoon trading on the Nasdaq on Wednesday.
The stock has lost more than 80 percent of its value since April 2011, when Sinovel refused to accept shipments.
Chinese wind turbine makers, among the world's largest, are also under pressure from an expiring U.S. tax credit for wind power production.
AMSC may run out of cash and not be able to sustain operations beyond next year, said Ardour Capital Investments analyst Jinming Liu.
"If they can't solve the lawsuit with Sinovel in the near term, they may have to look to divest some of their subsidiaries to raise to more cash," Liu told Reuters.
AMSC sued Sinovel last November alleging it had violated their sales contract and stolen intellectual property. It has sought to recover more than $1.2 billion through civil cases filed in various Chinese courts.
AMSC, which has reported losses for eight straight quarters, said it expects to have more than $48 million in cash, cash equivalents, marketable securities and restricted cash on December 31.
The company expects the restructuring, which includes consolidation of some offices, to lower annual operating expenses by about $10 million to less that $58 million.
AMSC said it expects to incur restructuring charges of between $3 million and $4 million over the next two quarters, $2 million of which will be taken in the current quarter.
Analyst Liu said he believes AMSC could return to profitability if it divests its grid business, which makes superconductor products such as power cables and motors. The business accounts for about 40 percent of total revenue.
"The key is their superconductor business. It burns a lot of money ... and is not profitable."
(Reporting by Sagarika Jaisinghani in Bangalore; Editing by Maju Samuel, Sriraj Kalluvila)
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