CAPSTONE'S FALL STEEP WEAKENED SALES FORECAST DRIVES STOCK DOWN MORE THAN 28 PERCENT.

Byline: Evan Pondel Staff Writer

CHATSWORTH - Capstone Turbine Corp. shares plummeted more than 28 percent Wednesday after the manufacturer of power generators lowered its sales expectations for the third quarter.

The Chatsworth-based company said it expects a decline in sales of its 30-kilowatt and 60-kilowatt microturbine units during the period ended Sept. 30, 2001.

Keith Field, Capstone's director of corporate communications, referred all questions to Chief Financial Officer Jeff Watts, who did not return several messages.

``This really clouds the visibility for the company,'' said Sanjay Shrestha, a research analyst with FAC-Equities in New York. ``How low is it going to go?''

Analysts remain confounded why the company didn't provide a revised estimate. ``It's like a double-edged sword - you don't want to speculate how bad it's going to get,'' Shrestha said.

Instead of providing investors with some sense of the company's financial direction, a statement from Capstone remained neutral on what lies ahead.

``Our sales force has many proposals before potential customers ... so we are not in a position to estimate what our sales this quarter will turn out to be,'' Ake Almgren, president and chief executive officer, said in the statement.

In Capstone's second-quarter results, the company said it had a sales target of 600 microturbine units for the third quarter, expecting at least 400 of those units to sell.

Capstone also highlighted in its results that ``demand for 60-kilowatt models appears to be strong'' with a goal ``for these models to comprise 50 percent of our shipments in 2002.''

However, the company did caution ``that the exact timing of receipt orders is always uncertain.''

And that uncertainty weighed heavily on Capstone shares, which dropped $2.07 to close at $5.18 Wednesday.

Shrestha said Capstone's shift to a commercial business from a research and development-driven company might have triggered its lack of periphery.

``It's never a seamless transition when a company goes from R&D to commercial,'' he said.

Still, the company remains a leader in microturbine manufacturing with about $200 million in cash, Shrestha said.

``But it's hard to put numbers behind a company,'' he said.

In July, the Energy Secretary Spencer Abraham awarded Capstone $3 million for the research, development and testing of packaged cooling, heating and power systems for buildings.

Capstone was also a finalist for Deloitte & Touche's 2001 Los Angeles Technology Fast 50 program due to percentage growth in revenue.

With the economy weighing on most technology companies, Capstone hasn't been hit with a vengeance, Shrestha said.

``And I was pretty satisfied with their second-quarter numbers,'' he said.

In the second quarter, the company reported a net loss of $10.3 million, compared with a net loss of $429.1 million, or $14.32 a share, in 2000.

The company had revenue of $13.6 million, versus revenue of $6.1 million for the same period a year ago.

Capstone expects to announce its third-quarter results on or about Oct. 25.

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