UPDATE 3-A123 shares drop, Fisker cuts battery orders

* A123 cuts 2011 revenue forecast after Fisker cuts orders

* CEO says Fisker decision unexpected, but temporary

* Shares fall as much as 13 percent on Nasdaq (Adds background on Fisker, CEO quotes, updates shares)

Nov 4 (Reuters) - Lithium-ion battery maker A123 Systems (AONE.O) cut its full-year revenue outlook by 20 percent on Friday after Fisker Automotive cut fourth-quarter orders for battery packs.

In a statement, A123 Chief Executive David Vieau described Fisker's decision as "unexpected." A123's shares tumbled as much as 13 percent in early trading.

A123, founded by scientists linked to the Massachusetts Institute of Technology, expects 2011 revenue to be between $165 million and $180 million. It earlier expected revenue between $210 million and $225 million.

"We are adjusting our 2011 revenue expectations due to an unexpected reduction in orders for battery packs from Fisker Automotive for the fourth quarter as it balances inventory levels from all suppliers," Vieau said.

An A123 spokesman declined to say how much Fisker cut back its orders. A123 reports third-quarter earnings on Nov. 9.

Battery packs for the Fisker Karma plug-in hybrid electric vehicles represents a significant portion of A123's revenue, Waltham, Massachusetts-based A123 has said in regulatory filings.

Fisker has missed several launch dates for the Karma. In July, the company gave its first Karma to actor Leonardo di Caprio, who is also a Fisker investor. [ID:nN1E76P2DY]

In a statement, A123's Vieau said the company expects the reduction in volume will be temporary because the Karma has been certified in the United States and Europe, clearing the way for vehicle sales.

In January 2010, A123 invested $20.5 million in cash and stock in Fisker, receiving convertible preferred stock in Fisker in return. A123 has warned investors that if Fisker falls short of its strategic plan, A123 may not recover this investment, resulting in a material loss.

A123 shares were 12.3 percent lower to $3.09. (Reporting by Bijoy Koyitty in Bangalore and Deepa Seetharaman in Detroit; Editing by Maju Samuel and Derek Caney) (bijoy.koyitty@thomsonreuters.com; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800; Reuters Messaging: bijoy.koyitty.reuters.com@reuters.net))