Ann: FBR and Caterpillar discontinue MOU, page-111

I don't like this announcement, but I'm not surprised.  The way Mike said in an Inside Market interview "If FBR and CAT can just get their act together..." told me they had conflicting views on how to get the HX out to the world. I believed for a long time they could iron this one out and meet in the middle somewhere, but it's clear now they are two different companies. I think FBR and Weinerberger are more aligned in their strategic outlook so I'm excited to see how this will manifest.

Are CAT out because of technical issue? I seriously doubt it. If the HX couldn't build a house outdoors, CAT would've surely given them until Jan 31st to see it through. What I really think has happened is that FBR has presented it's Wall as a System and CAT have told them outright they can't get on board with it, because their game is manufacturing and selling machines. That's how CAT were going to optimise profit on this deal. They want to churn them out and collect the vast majority of the profit, all the while expecting FBR to wipe their chin and be happy with the chump change 2-5% from each machine sale.

Try not to forget that if CAT didn't want to takeover FBR, they'd be trying to strike a deal in which FBR would have minimal movement and input in terms of the business model. They're the big players, they wouldn't tolerate any insolence, because they've done it a hundred times before. Bend over and take this deal FBR, it's a good deal, we promise. This decision could be the difference in FBR making $10M off it's first 10 machines with the WaaS or $1M if it signed an agreement with CAT to mass produce and take a measly proportion of the profit.

There's been bugger all change in the depth since the ann, but market could still react terribly to this tomorrow, who knows. As I said I don't believe it's a technical issue here so the silver lining here is the greater potential for profit. Also, something to chew on is the US Office is still operational, manned by the former CAT Innovation Manager with 30 years behind him, therefore I've got no plans to sell atm.