China BAK Batteries, a China-based lithium ion battery maker, had seen a surge of 63 percent in its share price last Tuesday due to the speculation that Google had contacted the company to manufacture and supply batteries for the much awaited Nexus One smartphone.
However, the shares of the company fell substantially when the company denied the existence of such a contract between them and Google. The China BAK Battery stock fell by 22 percent to $2.83 after seeing an initial surge of almost 63 percent in its stock price.
According to financial reports filed by the Chinese company in the past, it had been struggling with losses since its first year of operation and had announced last month that it will try to break even in 2010, leading some analysts to believe that the company may be become profitable in near future.
The company manufactures and supplies lithium batteries for mobile phones, laptops and other portable devices apart from supplying batteries to some domestic Chinese original equipment manufacturers for mobile phones.
China Bak's Chief Financial Officer, Tony Shen, told Bloomberg that "On the mobile phone side, the majority of business and historical business has been in the replacement battery business."
Someone should try to find out the source of the rumour as quite a few people have possibly been trading China BAK shares in the build up before the shares fell heavily. The Nexus One battery will be a removable one, a positive point compared to the iPhone's non removable battery.
(Wall Street Journal)