Changes and Advances in Power Production, Including Fuel Cells, Could Put a Charge in Investors' Portfolios.

Business Editors

NEW YORK--(BUSINESS WIRE)--April 26, 2000

Bear Stearns Analyst Provides a Detailed Look at What Could Be the

Next Big Industry for Investors

Over the past several years investors have capitalized on growth of the Internet and the telecommunications industry. Now, according to a new report by Bear Stearns analyst Robert Winters, it is time for investors to turn some of their attention to energy. According to Winters, revolutionary changes are underway in the worldwide power industry. New technologies such as microturbines, flywheels, and fuel cells could totally reshape how we power our homes, our cars and our commercial/industrial enterprises. The power generation industry, including fuel cells, has the potential to provide investors with rewarding investment opportunities in the future. "Investors, who have embraced new technologies, especially early on, have sometimes enjoyed extraordinary results," commented Winters. "What is interesting is the parallel between the market opportunities that exist in the energy industry and those that existed in the telecommunications market over a decade ago." Winters believes deregulation, which greatly enhanced competition, growth and opportunity in telecommunications, will play a similar role in the power industry.

Competition for the Internal Combustion Engine 

According to the Bear Stearns analyst tremendous advancements in performance and costs over the past decade are bringing the futuristic idea of fuel cells closer to reality. "With the potential for higher efficiency, lower operating costs, zero emissions and quieter operations, the use of fuel cells could revolutionize the power industry," says Winters. Ford Motor Company Chairman Bill Ford Jr., whose company is developing a fuel cell-powered car, commented recently, "I believe fuel cells will finally end the 100-year reign of the internal combustion engine." While Winters believes that the internal combustion engine will remain dominant for years (and perhaps decades) to come, the market potential for fuel cells is nonetheless significant.

Fuel Cells are Just The Beginning

Fuel cells are just one of several new technologies that could turn the global power industry on its head over the next two decades, according to Mr. Winters. Technologies such as microturbines, flywheels, advanced battery technologies and next generation combined-cycle IGTs (industrial gas turbines) can be combined with sophisticated techniques to operate, control and trade power. In addition, Mr. Winters speculates power generation will move from a radial design centered on large power generating facilities to a more decentralized setup where power-generating assets move closer to the point of consumption. These new types of power generation can be more readily sized to the load factors of a given market, which could result in a more economic distribution of resources. In addition to primary power generation opportunities, there are other significant market opportunities for these new technologies that exist in areas such as backup/standby power, UPS systems (Un-Interruptible Power Supply), and power quality. "As our society becomes increasingly dependent on the Internet, as well as other communication formats such as wireless voice and data transfer, the need to create systems which are "fail safe" becomes imperative," says Winters.

Powerful Business Opportunities

In addition to issuing the report, Winters has initiated coverage on two leading publicly traded companies in the fuel cell industry, Ballard Power Systems (BLDP), rated a Buy, and Plug Power (PLUG), also rated a Buy. According to Winters, both companies have made inroads into the alternative energy market. Ballard has teamed with DaimlerChrysler and Ford Motor Co. in the automotive market (the two companies combined own close to 35% of BLDP) and has several important partners in the power generation (GPU, Alstom, EBARA) and portable power markets (Coleman Powermate). Ballard's latest fuel cell system can, according to the company, match the costs and performance of today's internal combustion engine when manufactured in commercial volumes. In addition, all major automakers have committed to having commercial fuel cell vehicles available by 2003-05. Plug Power is focused more exclusively on the residential power market opportunities and is teamed up with General Electric to develop these systems for use in this country and around the world. Other companies are also emerging in the alternative energy universe, according to Winters. The analyst, who expects several new public offerings from energy-related companies, estimates that there could be as much as $200 billion dollars in annual sales up for grabs when the industry becomes more established.

Who Will Win

According to Winters there is not one company or technology that will be the winner in this field. "There's clearly an enormous market potential for many of these companies to succeed," he said. Instead, Winters suggests investors remember that some of the most important investment opportunities in the telecommunications/Internet market came from what is known as "plumbing companies"--such as Cisco, Nortel, Qualcomm and Lucent Technologies. These companies, according to Winters, did not focus on becoming suppliers to end users; they became the suppliers/enablers to network providers. "It is our opinion that investors will profit most by ultimately owning and playing the enabling technologies in the energy field. This has been true in the telecommunications and Internet sectors, where the equipment providers have proved to be among the biggest beneficiaries and the best investments."

To learn more about the energy report, or to speak with Robert Winters, please contact Roseanne Nizzari at 212-272-4314 or Russell Sherman at 212-272-5219.

Founded in 1923, Bear, Stearns & Co. Inc. is a leading worldwide investment banking and securities trading and brokerage firm, and the major subsidiary of The Bear Stearns Companies Inc. (NYSE:BSC). With approximately $23.2 billion in total capital, Bear Stearns serves governments, corporations, institutions and individuals worldwide. The company's business includes corporate finance and mergers and acquisitions, institutional equities and fixed income sales and trading, private client services, derivatives, foreign exchange and futures sales and trading, asset management and custody services. Through Bear, Stearns Securities Corp., it offers global clearing services to broker dealers, prime broker clients and other professional traders, including securities lending. Headquartered in New York City, the company has more than 10,200 employees located in domestic offices in Atlanta, Boston, Chicago, Dallas, Los Angeles, San Francisco and San Juan; and an international presence in Beijing, Buenos Aires, Dublin, Hong Kong, London, Lugano, Sao Paulo, Shanghai, Singapore and Tokyo. For additional information about Bear Stearns, please visit our Web site at http://www.bearstearns.com.

Any recommendation contained in this report may not be suitable for all investors. Moreover, although the information contained herein has been obtained from sources believed to be reliable, its accuracy and completeness cannot be guaranteed. Bear Stearns may make markets and effect transactions, including transactions contrary to any recommendations herein, or have positions in the securities mentioned herein (or options with respect thereto) and may also have performed investment banking services for the issuers of such securities. In addition, employees of Bear Stearns may have positions and effect transactions in the securities or options of the issuers mentioned herein and may serve as directors of such issuers. Copyright (c) 2000. All rights reserved by Bear, Stearns & Co. Inc.