North Coast Solar Stocks

March 17, 2009

Energy Conversion Devices Dims

Filed under: CSIQ, DD, ENER, FSLR, SPWR, TAN — Tags: , , , , , — Jason @ 4:40 pm

Carl Gutierrez, 03.17.09, 04:40 PM EDT

Solar company yanks its outlook amid a flailing, uncertain economy.

Energy Conversion Devices (ENER) fell by more than a fifth after it yanked its outlook and said it would cut back on its expansion plans because of the weak economy.

The announcement comes a little more than a month after investors shrugged off a tepid third-quarter and fiscal-year outlook, and instead took the company’s sales guidance as a positive even though it was lowered from previous expectations. (See “Energy Conversion Cuts Its Way To Profit.”)

But now, the projections no long apply because of project financing difficulties caused by the recession–a major issue for the fledging solar industry. Energy Conversion said on Monday that it plans to consolidate some production facilities and eliminate about 70 jobs. Chief Executive Mark Morelli thinks the third quarter should yield a profit.

Energy Conversion solar panels use thin-film technology, but its product is unique in interesting ways. Most solar panels are hard, flat planes, but Energy Conversion’s product can be rolled onto roofs in strips, are lightweight and can become part of the physical roof.

Elsewhere in solarland, Canadian Solar (CSIQ) reported a loss well off expectations on Tuesday. It cited difficult credit conditions, price declines and other factors. Its outlook was in line with expectations, but assumes improved conditions in the second half of the year.

By afternoon trading, Energy Conversion’s shares fell 24.7%, or $4.56, to $13.87, while Canadian Solar slid 8.0%, or 31 cents, to $3.57. The rest of the sector was hit too, as First Solar (FSLR) dropped 8.8%, or $11.00, to $113.86, and SunPower (SPWR) sunk 11.8%, or $2.76, to $20.55. The Claymore/MAC Global Solar Index (TAN) exchange-traded fund fell 3.2%, or 17 cents, to $5.17.

Ironically, the current economic downturn is one of the best things to happen to the burgeoning solar industry, which depends on subsidies to be competitive. (See “Moment Of Truth For Solar.”) The difficult times will force companies to find creative and aggressive ways to cut costs. “We’re going to see a lot of market consolidation through acquisitions, bankruptcies and so on,” Deutsche Bank analyst Steve O’Rourke told Forbes earlier this month.

Separately, DuPont (DD) said it expects to nearly triple its annual solar cells sales to more than $1.0 billion by 2012. The company said its projections are based on strong fundamentals for long-term sales growthin the solar cell market combined with the company’s assessment of its own resources.

DuPont’s move is indicative of a broader trend in the industry. As the industry’s viability increases, major companies will begin to enter the sector and offer more competition. “Samsung, LG, Siemens and General Electric–if it can sort out its issues– will get more aggressive,” O’Rourke says. “These are big companies, with big resources, and it will be tough for ‘me-too’ companies to compete.”

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