Here’s the core question: Is Raser a legitimate geothermal developer or a company chasing the latest hot trend pumping out news to prop up valuation?

There has been some spirited discussion inside our shop about which is the “real” Raser, and as a team, we’ve really taken a “wait and see” attitude. One side of the argument goes: this is a company that has entered the geothermal developer space with both feet. The company has acquired development rights on nearly 12,000 acres, has now inked a PPA for 21MW, has secured funding for 155MW of construction, has drilled a well and hit resource, and has secured a deal with a supplier for the harvest technology needed to convert geothermal resource into electricity. If that’s not the profile of a “real” geothermal developer, then what is?

The other argument centers around the fundamentals. The company’s cumulative revenue is under $1M and its cumulative loss is now over $50M. Yet, it maintains a market capitalization of nearly $400M! The first Raser business centered around electric motors and was branded Symetron and targeted for use in the automotive industry. Despite a few agreements, the business has failed to materialize. Thus, a strategy switch to geothermal developer with an initial false start where a definitive agreement to purchase a geothermal company was terminated at the target’s request. Now, the company has charted a course to fund the geothermal development with heavy debt and dilutive equity agreements. The facts are stark: The company has under $6M in cash and near-term liabilities due this year over over $34M according to its own financial filings. In fact, in those filings, the company’s independent auditor questions the company’s ability to carry on operations.

There are the two arguments, there is validity in both positions we believe, but recent developments show the company is serious about geothermal development even if the financial underpinnings are very precarious. One way or another, 2008 is the year that should answer the question definitively.