More green solar in the tank
09/28/2011 3 Comments
We are all familiar with the Solyndra’s problems, hyped by Obama, highly public bankruptcy and the FBI raid. What about the rest of the solar industry? The Investor Place has some insight in to three of the biggest names in the sector:
Evergreen Solar plummeted to about a dollar in late 2010 as it tried to restructure its debt. Now it trades for about a nickel — after a 1-for-6 split in January — and has been relegated to the pink sheets. That recent flop would be bad enough, but when you consider that shares traded for an adjusted price of $12 or so at this time in 2009, the losses look even uglier. Evergreen filed for bankruptcy in August to try and scrape together the $485 million it owes creditors and soon will disappear forever.
First Solar is the “leader” among pure-play solar stocks in the U.S., with a market capitalization of almost $6 billion. FSLR stock is down 48% since Jan. 1, 2011. The leader by most measures in the industry, First Solar saw its profits slashed by more than half — from $159 million to $61 million – as Europe’s debt woes resulted in subsidies being slashed. Adding insult to injury, Axiom Capital’s Gordon Johnson slashed his price target for the stock from $75 to $35. That’s another 50% decline from here, and barely a tenth of First Solar’s peak share price of $317 in 2008.
Sunpower is next in line among the larger domestic solar players. Its stock has performed “better” than First Solar in 2011, down about 30% in 2011. However, since its peak valuation in 2007 over $130, the stock has flopped almost 95% to under $9 a share as of this writing. Why? Volatile revenue and profit performance makes for a risky bet — and the fact that SPWRA is cruising towards a third-straight quarterly loss has investors leery. What’s more, long-term debt of more than $500 million and total liabilities pushing $1 billion mean there’s not a lot of room for error considering the company’s $900 million market cap. There are serious hurdles to growth, considering the very expensive nature of solar panel manufacturing facilities on top of current debt loads.
It is hard to believe that the State of California is betting on this sector to create “green jobs” and restore the state’s economy. Gov. Jerry Brown signed legislation authorizing the state to raise $200 million more from utility rate-payers to subsidize the installation of photovoltaic solar panels on homes and small businesses, and also extending the Public Utility Commission’s authority to collect $83 million annually from ratepayers for similar projects. This is not going to end well, and the taxpayer are going to end up holding the bag.