Capstone Shares Drop on Affiliate Trouble

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Shares of Capstone Turbine Corp. fell 12 percent Friday after it announced it might terminate its agreement with an affiliated company that integrates, markets and services Capstone heating and power generation systems.


UTC Power LLC failed to meet its annual sales targets, and was given 90 days to remedy the problems or it will lose its contract, according to a Securities and Exchange Commission filing by Chatsworth-based Capstone.


Capstone has recently emerged from financial woes after a reorganization and government tax rebates for its products encouraged analysts, more than doubled its stock price to over $5 a share. It closed Friday at $4.78.


UTC Power, a unit of Hartford, Conn.-based United Technologies Corp., has a long-term contract to integrate, market and service combined heat and power systems for commercial buildings based on Capstone’s electricity and heat generating machines and some of its own products.


Capstone sales to UTC in fiscal 2005 were $2.5 million for the fiscal year ended March 31, 2005 and $1 million for the like period a year ago.

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