A new licensing and manufacturing deal with Dresser-Rand could bring profitability to Irvine-based Ener-Core Inc. after nearly a decade in the red.
The Siemens AG unit has exclusive rights under the 10-year agreement to manufac-ture Ener-Core’s 1- to 4-megawatt Power Oxidizers and to sell the energy-producing units to industrial customers. Ener-Core will receive licensing fees of $370,000 to $600,000 per unit. Dresser-Rand has agreed to minimum sales thresholds, which weren’t disclosed.
“It should fairly predictably push us to being a cash flow-positive company starting next year,” Chief Executive Alain Castro said.
The company’s cash-burn rate is projected at roughly $3.5 million next year.
“The revenue we expect will be north of that,” Castro said.
The company, founded in 2008 as Flex-Energy LLC, showed promise by developing a system that turned methane gas emitted from landfills into electrical power. It raised more than $20 million from venture capitalists, including Irvine-based Sail Venture Partners, the majority owner before a reverse merger in June 2013 created Ener-Core, which trades on the Over-the-Counter board.
The latest development marks yet another shift for the company, which originally set out to sell microturbines, microturbine systems, and recuperators from the acquired energy systems business of Ingersoll Rand Co.
That strategy failed, because producing large-scale systems in Irvine wasn’t economical as the company moved from 250-kilowatt power stations to bigger versions.
That prompted it to partner with turbine manufacturers and license the technology.
“As a small company in Irvine, we couldn’t compete with Siemens, GE and Caterpillar,” Castro said. “The economics get better as you get larger.”
Job Cuts Continue
Another big round of layoffs has hit the turbulent disk drive market.
Western Digital Corp.’s Cupertino rival, Seagate Technology PLC, is cutting 6,500 jobs from its global operation over the next year. The news, which was welcomed by investors, follows a recent cut of 1,600.
Irvine-based WD has trimmed more than 500 employees in the past few months during its massive integration of SanDisk Corp., which was acquired for $17 billion, and of HGST, which was bought for $4.8 billion in March 2012 but only recently earned a nod from Chinese regulators to integrate operations in the world’s most populous country.
Most of WD’s recent cuts came at its Silicon Valley outposts in San Jose and Fremont.
The industry job reductions follow a particularly rough stretch in the PC market. Units sold last year fell below 300 million for the first time since some of the darkest days of the recession in 2008.
Apple Inc., also based in Cupertino, was the only PC maker in the top five to post a sales gain last year.
Air Force Work Nabbed
The Irvine operation of Parker Hannifin Corp. has won a multiyear Air Force contract that could be worth nearly $31 million to add fuel injector nozzles to the long-range B-1 bomber.
The five-year deal, which runs through June 2022, carries a five-year option.
Cleveland-based Parker Hannifin is one of the world’s most diversified manufacturers of motion and control systems. The company posts annual sales of about $13 billion and has operations in 50 countries.
