Fuel Cell Maker Bloom Energy Shedding Executives, Stock Value

 -- Updated 11/4/19 with comments by a Bloom spokeswoman

Bloom Energy, which has seen more success than other fuel cell makers in the data center market, has been navigating rough waters recently.

A number of key executives have left the company, including Peter Gross, the industry veteran who led its data center business for six and a half years. After going public at $22.60 per share last July, its stock lost half its value by the end of 2018 and declined even more in the second half of this year. Bloom traded at $3.34 per share when markets closed on Friday.

The most recent steep drop came in September, after short seller Hindenburg Research put out a report speculating that servicing costs for Bloom Energy Servers installed at customer sites were mounting and would eventually bring the company to its knees. The report got skeptical reception by some analysts, but the company’s stock price dropped 26 percent nevertheless and has not recovered since.

The company’s gas-powered fuel cell technology, which took root when its founder and CEO K.R. Sridhar was working at NASA on fuel cells that would support life on Mars (NASA eventually killed the project), was impressive enough to convince several major data center operators to sign up. As of February, Bloom Energy Servers were powering a total of about 100MW of data center capacity for companies including Apple, eBay, AT&T, JP Morgan, and Equinix.

Related:Effectively Locked Out of Key Data Center Market, Bloom Sues Santa Clara

The company closed all those data center deals during Gross’s tenure there as VP, mission critical systems. He left in August and became managing partner at the business consultancy PMG Associates.

Other recent high-level departures include Bill Kurtz, who left at the end of 2018 after more than a decade as the company’s chief financial and commercial officer, according to his LinkedIn profile; VP of system engineering Arne Ballantine, who left this August; and VP of communications David McCulloch, who left last month.

After this artile was first published, a Bloom spokeswoman told DCK via email that having "a few executive departures" was "natural course of business" and "doesn't indicate a trend."

"While it’s true that Peter Gross retired from Bloom earlier this year and he was valuable to our business, data centers continue to be a key customer vertical for us and our leadership continues to stay focused on it," Natalia Blank, head of corporate PR at Bloom, told us.

Blank also pointed out several recent customer wins and partnerships that "show our company's health and viability," including a 37MW deal with Duke Energy, a 4MW biogas-powered installation in India, a partnership to develop a biogas-based solution in California, and a collaboration with Samsung Heavy Industries to design a fuel-cell system that can power ships.

Related:Can Bloom Energy Transform the Data Center Industry?

Earlier this week, Axios published an investigation of Bloom’s finances, based on its review of confidential documents, insider interviews, and public information. The article describes a pattern of overpromising and underdelivering by the company’s executives but leaves open the question of whether the pattern was a result of malice or simply sloppiness.

An investment bank called Advanced Equities went under in 2012, following an SEC lawsuit charging its two co-founders with misleading investors about Bloom’s business prospects. The bank settled and shut its doors shortly thereafter.

The investors Advanced had allegedly misled participated in a $150 million Series F funding round the bank raised for Bloom on behalf of the startup’s major early backer Kleiner Perkins in 2009. According to Axios, just several months after Advanced had hit its target for the round, it learned that Bloom had cut in half its three-year revenue projections, suspended shipments for the year’s third quarter, and delayed IPO plans.

Advanced blamed Bloom executives for lying to its brokers, but SEC charged the bankers with greatly inflating the manufacturer’s order backlog, the size of an order one big customer had signed, and the size of a Department of Energy loan Bloom had been granted.

Today, years after Advanced’s disintegration and more than a year after Bloom finally went public, the late bank’s founders, Dwight Badger and Keith Daubenspeck, continue duking it out with Bloom in court. There’s also a separate ongoing class action lawsuit against Bloom.

The Axios report lists numerous instances of Bloom executives misrepresenting its costs and profit expectations to the press and the company’s own board of directors, as well as putting both closed sales and mere letters of intent in the same “backlog” bucket.

It remains unclear whether the misrepresentations were intentional or a symptom of sloppy housekeeping.

Badger and Daubenspeck were in the 2009 board meeting when many of the misleading statements were made, but, as the report points out, that doesn’t mean they’re not responsible for having passed those claims on to investors.