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Tickers in this Article: ELON, HON, JCI, GE, ITRI, CSCO, MSFT
Human beings aren't the only ones trying to save on their energy bills; corporations are also struggling to find ways to cut back on the juice. Many companies are turning to power saving technology from Echelon (Nasdaq:ELON). The basic idea is Echelon's products turn off the lights when they aren't needed, but of course there is more to it than this.

Companies like McDonald's and Eddie Bauer have already begun using Echelon technology to control the power supply to equipment; the question now is, can this small company survive and grow in a crowded market?

Energy Wasters No More
Echelon's LonWorks product was chosen by clothing maker Eddie Bauer for a 2.2 million square foot fulfillment center. The system helps the facility manager optimize its heating ventilation and air-conditioning systems along with the lighting systems.

The LonWorks product is sold to original equipment manufactures like Honeywell (NYSE:HON) and Johnson Controls (NYSE:JCI), keeping their final products energy smart. Echelon's main revenue driver is its Networked Energy Services (NES) for the electric utility industry. The NES system helps utilities lower costs by cutting down on meter reading errors, and, with its open architecture, it also allows for the integration of new devices that may be added to the utilities infrastructure over time.

McDonald's has incorporated Echelon's technology into its "Home of the Future" project. The idea is to have kitchen appliance makers use the LonWorks technology in an effort to lower energy costs.

Small Fish, Big Pond
Echelon revenues hit a record hit of $138 million last year, but total operating income was in negative territory for the third year in a row down $19.7 million. (Learn more on this profitability measure, in Zooming In On Net Operating Income.)

Echelon increased its product development budget to $32.6 million last year, up from $24.9 million in 2005. The additional R&D is meant bring down the cost of production. With a market capitalization below $500 million, Echelon is much smaller than other players in the field, and its stock has been very volatile over the past year and should only be followed by investors with a long time horizon.

Established Smart Metering/Networks
Larger companies that are also working on smart meters include: General Electric (NYSE:GE) and Itron (Nasdaq:ITRI). On the networking front, Cisco Systems (Nasdaq:CSCO) and Microsoft (Nasdaq:MSFT) are worth investigating. Microsoft has already built a smart home in Redmond, Washington, that uses technology like voice recognition and body temperature sensors to enable the house to respond more to individual resident needs.

Conclusion
Echelon has attracted the attention of big name customers, but its stock is too volatile in my opinion for the individual investor. The company does have great technology and I expect it to be one to watch in the future.

To save on your own electric bills, read Ten Ways To Save Energy And Money.

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