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Clouds form over solar share prices

By Mark Halper | October 7, 2011, 5:12 AM PDT

Stormy days for solar investors.

Plunging solar prices may be good for consumers, but they continue to make more grim news for the solar industry: Solar share prices are getting hammered as profit margins decline.

As Greentech Media spotted earlier this week, two of the planet’s largest solar companies, First Solar, and Suntech, were trading at various historic lows.

While China shoulders a hefty share of the blame for free falling panel prices – a host of factors enable Chinese manufacturers to sell at low rates – the stock malaise is an equal opportunity affliction. NYSE-traded Suntech is Chinese.

On Monday of this week, the stock price at Suntech, the world’s largest panel maker, dropped 26.41 percent to $1.70, “an historic low,” GTM noted.

Suntech has wilted even though, as GTM notes, it was on track to meet its full year guidance of 2.2 gigawatts of sale, as of its last quarterly report. At the time it scaled back its revenue projections for the year by $100 million, to around $3.3 billion, as the firm foresaw an acceleration of price declines by a “high teens” percentage through the third quarter, following a second quarter decline of seven percent. Gross margins were thin at 4.1 percent.

The same day that Suntech shares collapsed, Tempe, Ariz.-based First Solar’s, share price fell 8.4 percent to $57.90, its lowest since April 2007, GTM pointed out. (It has crept back up, closing yesterday at $64.73).

At least Suntech and First Solar aren’t penny stocks like Westinghouse Solar, which was trading at 72 cents at the time of this writing. Earlier this week, NASDAQ sent the company a de-listing warning because it had traded below a dollar for 30 consecutive days. NASDAQ will either kick Westinghouse off the stock exchange if it don’t rise consistently above $1.00 by April 2, or will grant another 180 days to beat a buck.

The depressed stock prices reflect the same trading environment that has forced U.S. solar firms Solyndra, Evergreen and SpectraWatt into bankruptcy, and that prompted recent layoffs and closures at Norwegian solar pioneer REC.

Photo: John Kerstholt/Wikimedia

More rocky solar business:

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About Mark Halper

Mark Halper is a contributing editor for SmartPlanet.

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The math checks...

Thanks to the unspecificity of the article, it's hard to be sure, but given the theme of the article is falling panel prices, and the lack of any statement regarding expenses falling as well, one must presume that the reduction in revenue occurred without any corresponding reduction in costs. Therefore it is a direct reduction in profits.

And yes, for anyone interested in seeing solar power actually succeed, Waahh! It is not sufficient for people to simply feel all gooshy and warm about a technology, to make it a pervasive reality. Some form of return for the investors is necessary. 4.1% is a lousy return, and slipping on that is a death knell. At the point where investors start _losing_ money compared to simply putting their funds in an interest-bearing account, any impetus to make a company and its technology successful is dead. I'm all for cheap solar power, but I'd rather the technology survive to be inexpensive tomorrow, than for it to die because idiots made it too cheap to survive today.

Posted by willray

10th Oct

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In

It's not reflectivity

Since no-one else has bothered to respond, and this might actually be a question -- you have reduced "reflectivity" (or reflectivity plus absorption and reemission) from solar panels, than from other surfaces. A portion of the light energy that hits a solar panel, is converted into electrical energy, therefore less than 100% of the energy goes into localized heating or reflected energy. This is an improvement (by the efficiency of the panel) over anything else for which conversion of incoming light into (the sum of) heat and reflected energy, is 100% efficient.

Posted by willray

14th Oct

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Boo Hoo.

Poor Suntech will ONLY make $3.3 billion this year.

My heart bleeds for them, but no worries, I am a fast healer.

What a bunch of whiny crybabies.

Posted by Hates Idiots

7th Oct

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Boo Hoo on us

@ Hates Idiots - US is so in debt to china - If their economy has a problem then so will the US. We owe china so much - the Chinese Govt. Doesn't want us to pay back all at once. If we were to settle our debts with china today - Our $$ trade with them would change so drastically that Price of "made in China" will go sky High. This means US will stop buying chinese products and that will adversely affect their entire economy. US Economy cannot withstand the China Economy to plummet.

Posted by llandau@...

7th Oct

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Do the math.

"scaled back its revenue projections for the year by $100 million, to around $3.3 billion"

Are you really expecting me to feel bad that their profits dropped on $3.4 billion to 3.3 billion.

That has to be the funniest thing I have ever seen posted here.

Posted by Hates Idiots

Updated - 7th Oct

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Reading comprehension problems much, self hater?

Their gross revenues dropped from 3.4 billion to 3.3 billion. That is the amount of money they brought in, not their profit. Their profit margin was 4.1 percent of that 3.4 billion. That's $139 million.

It's hard to tell from the poor wording of the article, but their profits either just fell from (approximately) $240 million, to $139 million, or from $139 million to $39 million. Either of those, drops, for a company that has almost $3.3 billion operating expenses, is horrifying. Even the pre-drop profit was at the level where investors shoot a company in the head and go play somewhere else.

I've noticed you've got real difficulty reading properly before, but if you hated yourself less, maybe you'd do better.

Posted by willray

7th Oct

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Check your math.

"scaled back its REVENUE projections for the year by $100 million, to around $3.3 billion"

So it is a 4.1% PROFIT MARGIN on $3.3 billion verses $3.4 billion.

I'm not shedding a tear over them losing $4.1 million. So they made only $135.3 million profit instead of $139.4

whaa.......

Posted by Hates Idiots

7th Oct

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The math checks...

Posted by willray

10th Oct

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Wasn't the whole point of ramping up solar production...

...to eventually see prices fall to the point to where consumers would finally adopt "alternative energy" without the need to be prodded or subsidized?

Or was it everyones real plan to keep prices, subsidies and profits high indefinitely at taxpayer and consumer expense?

Posted by JohnMcGrew@...

7th Oct

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Now is the time ....

So now the US government should take all steps possible to leverage up construction of photo-voltaic solar plants. Prices are low, we desperately need to ramp up solar energy production, and we could probably find a way to buy from US manufacturers. Except that the discussion is so contaminated by morons and "deniers" that we can't do anything. One could wish that they might burn in hell, but since many of them are concentrated in the South, I guess they already are. Some justice in that, what?

Posted by SantaCruzRed

7th Oct

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If the government has to fund it, it's not viable

It's ridiculous to believe that "if only" the government would pour massive resources into solar, then our energy worries would be solved.

Prices have never been cheaper, but solar is still a niche product. It doesn't produce power 24 hours a day, meaning there's a huge hidden cost of providing traditional power that's idle for long periods as backup. It still requires a large upfront investment that most homeowners can't justify even if it pays for itself eventually.

If you're a big company wanting good PR, solar can pay for itself. If you're a public utility in states such as CA and CO which have renewable energy mandates of 30% or more, you have no choice. Even today these are the biggest markets for solar by far. But for the rest of us, solar still doesn't make sense. The government could give it away, but installation costs alone make it an expensive choice.

Posted by zackers

Updated - 10th Oct

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solar producers should produce electricity

Does it make sense if these manufacturers also get into the act of producing electricity? Rather than just wait for someone to buy their PVs, they may team up with companies that actually install PVs and produce electricity onto the grid.
I hope to see PVs installed over the roofscapes, highways, railways, parking lots of cities, using giant space frames rather than in the deserts.

Posted by jyanzikong

7th Oct

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Solar panels

I do have a mounting concern about all this solar acerage which seems to be wanted by the millions, acerage as well as population. What about the reflection from all these square miles of reflectivity? Back into the atmosphere? Is there anyone reading this that has a clue? Please, this is a lagitimate request.

Posted by Solution1

8th Oct

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It's not reflectivity

Posted by willray

14th Oct

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