Ocean Power IPO Heads for Choppy Waters

Since October 2003, Ocean Power's shares have traded on the London Stock Exchange's AIM market, where many smaller U.S. companies with little history of profit -- or with a distaste for regulatory costs in the Sarbanes-Oxley era -- have sought refuge.

Its LSE stock has had the kind of volatility that could make conservative investors seasick. Its chart looks like waves out of The Perfect Storm -- rising from 63 in July 2005 to 110 the following October, sinking down to 52 last November only to surge to 119 last month.

If someone could harness the volatility of that stock, they'd light up London.

That said, there's a lot going for Ocean Power. Founded in 1984, it's hardly a newcomer. Its buoys are designed to convert wave energy into mechanical energy, which is in turn converted into electricity. A group of 40 buoys can power up to 4,000 homes, either by adding power to a grid, or directly connecting to homes that are too remote to plug into one.

Buoys offer advantages over wind-power farms that can be deployed offshore. They stand 30 or 40 feet above the ocean's surface, compared with wind turbines that can reach as tall as 300 feet. The waves they rely on are a more consistent source of energy than wind. And, by using satellite and meteorological data, the supply of energy can be predicted in advance.