Eurotech Rises in Milan After Company Wins U.S. Railroad Deal

Eurotech SpA (ETH), an Italian maker of miniature computers, rose the most in eight months in Milan trading after it was chosen as one of two producers for computers used in U.S. railway crash-avoidance systems.

U.S. railway operators face a Dec. 31, 2015, deadline for installing new systems at switching locations on tracks and rail vehicles. The upgrade will cost the industry about $12 billion, Eurotech said in a statement today. The company’s ISIS XL platform will be incorporated into messaging servers to communicate data like speed and wayside status.

The shares rose 12.5 percent to 2.25 euros at 10:28 a.m. in Milan, the biggest intraday rise since July 12. Eurotech now has a market value of 79.9 million euros ($113 million).

“We expect the first important orders to come in by the end of the year,” Chief Executive Officer Roberto Siagri said in an interview. “It’s hard to make precise forecasts but the project will bring in significant orders for us.” He expects the biggest revenue boosts to come next year and in 2013.

The new system, called positive train control, is designed to prevent derailments and crashes such as the 2008 Los Angeles collision between a commuter train and a Union Pacific Corp. (UNP) freight train that killed 25 people. Sensors would have detected the risk of a crash and automatically applied brakes, the Federal Railroad Administration said at the time.

CEO’s Stake

Finmeccanica SpA (FNC), Italy’s biggest defense company, owns 11 percent of Amaro, Italy-based Eurotech. Siagri is the next- biggest investor with about 7 percent, according to Italian regulator Consob.

The CEO said in December that Eurotech may post a profit this year as it adds services such as cloud computing, which lets users access data, software and hardware through the Web. In 2010 Eurotech posted a net loss of 6.08 million euros compared with a loss of 9.6 million euros a year earlier. Revenue gained 19 percent to 99.3 million euros.

Eurotech’s products include high-performance computers, embedded boards and portable, nano devices such as wrist- wearable computers. Its handheld mobile computers are used in the logistics, transportation, health-care, defense and security industries. Eurotech, whose clients include Lockheed Martin Corp. (LMT) and Johnson Controls Inc. (JCI), generates almost half of its revenue in the U.S.

To contact the reporters on this story: Chiara Remondini in Milan at cremondini@bloomberg.net

To contact the editors responsible for this story: Vidya Root at vroot@bloomberg.net.

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