Three months ago analysts expected First Solar’s second quarter EPS to come in at $2.01. That estimate is now $0.92. Even if the company beats expectations, the results will be disappointing. So First Solar found some good news to report.

The smaller bit of news is that the company’s cadmium-telluride (CdTe) thin-film modules have been certified as able to withstand the corrosive effects of salty air close to coastlines. This means that First Solar’s modules can be used in a rather nasty environment and that the company’s 25-year guarantee actually means something.

The second bit of news is more interesting, if somewhat longer term in applicability. The company has announced that it has set a new record for CdTe thin-film efficiency of 17.3%. That is, the solar PV cell converts 17.3% of the sunlight that hits it to electricity. This is 0.6% better than the previous efficiency record, which was set 10 years ago. In technology circles, 10 years is about 3 lifetimes.

While First Solar’s achievement is certainly praiseworthy, production of the high-efficiency cells remains well into the future. Currently the company is shipping modules with efficiencies of 11.7%. (Modules, unfortunately, are not as efficient as single cells.) By the end of 2014, First Solar expects to be shipping modules with an efficiency of 13.5%-14.5%.

Compared with crystalline silicon solar PV modules, the efficiency is not as high, but the cost/watt more than makes up the difference. Current modules prices are right around $0.75/watt, the lowest in the entire solar PV industry. If the company can get the higher efficiency cells out at that price, that will be a significant achievement.

General Electric Co. (NYSE: GE) claims to have produced a CdTe module in its laboratories with an efficiency of 12.8% and that it will begin mass producing modules with these high efficiency ratings in 2013. That’s a bit lower than First Solar’s projected efficiency, but the timeline is more aggressive. If GE can make good on its promise First Solar will have some real competition in the thin-film solar PV space.

None of this is likely to sway investors much if First Solar’s earnings are not gargantuan. At around mid-day, shares are trading down about -2%, at $117.89, within a 52-week range of $111.40-$175.45. Any kind of miss or near-miss on expectations could push shares closer to the low end of that range.

Paul Ausick

First, the stimulus package is aimed at creating jobs.  Some 3-4 million jobs according to President Obama.

Estimates from the Solar Energy Industries Association and the American Wind Energy Association figure more than 200,000 jobs in their industries alone. With unemployment rates projected to go to nearly 10% nationwide next year, creating that many new jobs is a good thing.

But from a different perspective, those 200,000 jobs could serve to raise significant barriers to entry to competing, and better, renewable energy companies. Those jobs are not targeted at R&D, but at manufacturing. That, too, is a good thing, given the loss of manufacturing jobs in the auto industry and elsewhere. Provided, of course, that the necessary skills are transferable.

Still, if existing solar and wind energy companies can’t thrive and expand with the current levels of government incentives, how can throwing more money at renewable energy make things better? Subsidies for ethanol have distorted the market for corn and gasoline. And the grants proposed under the stimulus package amount to subsidies.

The government agency that oversees and makes the grants will come under a lot of pressure to pick one technology over another. The choices the agency makes could be right, or they could be wrong. In either case, some jobs will be created. But how long will those jobs last?

It’s a difficult choice. Recall the first $350 billion in TARP funds that was given to banks with virtually no strings attached and no accountability. A few billion went out as bonuses, much to the public’s dismay.

Given the nature of the current recession, only the federal government has the tools to kick-start the economy. But it walks a fine line. It can either just toss the money over the fence and wait to see what happens, as it did with the banks. Or it can try to target the money to where it will have the maximum intended effect, as with the funds for renewable energy.

As simple as it sounds, the $5 billion part of the stimulus package that would pay for weatherization of homes may be the most effective idea in the whole $50 billion package. It requires consumers to purchase goods and hire people. Simple, but very effective at creating jobs. More of that please.

Paul Ausick
February 13, 2009

"Future, Or Fracture?"

Last year was the year that alternative energy  was  set to take the world over.  High energy prices and election promises made green energy look like it had unlimited growth.  Then came the massive drop in energy prices. Then came the recession. Then came the lack of credit.  Combine all that with lower stock valuations and this is looking like solar companies will get hit with a wave of rolling blackouts.

Applied Materials Inc. (NASDAQ:AMAT) gave us the impression that what we are setting up for is the third wave of negatives for the sector.  What we saw out of JA Solar Holdings Co. Ltd. (NASDAQ: JASO) only adds fuel to that fire.   SunPower Corporation (NASDAQ:SPWRA) and GT Solar International Inc. (NASDAQ: SOLR) are both up since their earnings, but these might not be representative of the whole group. Investors’negative bias toward te will effect  earnings expectations for Suntech Power Holdings Co., Ltd. (NYSE: STP) next week and  First Solar, Inc. (NASDAQ: FSLR) the following week.

Applied Materials Inc. (NASDAQ:AMAT) has not been a leading  solar player in the past, but its comments illustrates the problems facing the industry. It seems far more cautious than many solar energy companies.   Applied Materials reported earnings this week and predicted that sales would not improve in the near-term. Problems are gaining in its solar operations.  While Applied sees a lot of growth opportunities, it has slowed its investment there due to lack of orders.  There was a year-over-year gain in the solar sector, but we heard a level of the solar equipment business currently being down as much as 50% in its crystalline-silicon solar sector.

Solar companies elsewhere probably do not give a hoot what Applied Materials loses or makes.  They probably don’t care about the profitability or lack there of at its solar operations either.  Not yet.  But along with factory closures, Applied said that it really doesn’t expect new contract orders in solar equipment for the next few quarters. It even gave the possibility that new solar orders might not be seen until 2010.

Shares of JA Solar Holdings Co. Ltd. (NASDAQ: JASO) are taking a beating after cutting its forecast last night.  It now sees 2009 revenue of $830 to $952 million, under analyst estimates of $993.8 million.  The commpany is not as cautious as Applied Materials, but its stock has also been more beaten up.  The company already cut its revenue projections by more than 20% in November.  JA Solar’s target for total production output is now 500 megawatts to 550 megawatts. The company’s “nameplate production capacity” is now expected to be 875MW by the end of 2009.  Shares are down “only” 8% on this because shares are down almost 90% from last year’s highs of $27.00.

SunPower Corporation (NASDAQ: SPWRA) is on the move.  It gave a positive earnings report at the end of January which pushed up the shares.  Its fourth-quarter and full-year results were above estimates, but it did lower expectations for 2009 to $1.40 to $1.90.  This was well under a prior estimate of around $3.00 but was given the “good enough for me” reception by traders looking for some growth and some value.

GT Solar International Inc. (NASDAQ: SOLR) also had earnings that were “good enough.”  It provides equipment and technology for the solar-power industry, and last week reported net income of $43.1 million or $0.30 EPS on revenue of $205.2 million.  These were huge percentage gains and earnings were above estimates. However, the company lowered sales and earnings guidance under estimates.  There have been some customers hurt by the credit and market malaise, but GT Solar  still sees growth.  Because of low valuations, the stock is up more than 35% since earnings.  It is simultaneously off well over 50% from its IPO last summer.

Suntech Power Holdings Co., Ltd. (NYSE: STP) is on deck with earnings next Friday.  The company raised its 2008 targets at the end of January, but said it sees impairment charges on investments.  The good news is that shares are up close to 10% since its January 23 guidance.  It also also suspended hiring 2,000 workers. This is in addition to already announced 800 workers.

What does that say for expectations in 2009?  Analysts are looking for an earnings decline on a slight revenue increase.  Those estimates have been rocked sharply lower over the last 90 days, and we are not sure that traders are going to take it too well if the company posts the losses expected as -$0.25 EPS for Q4-2008 and an expected -$0.02 for Q1-2009.

First Solar, Inc. (NASDAQ: FSLR) is one of the Holy Grail companies in the sector.  It is set to report earnings on February 24. Shares are currently around $140.00, well off of the $300+ highs.  But the stock is also up more than 60% from the lows just over $85.00 in November.  We have seen too many cracks in numbers elsewhere to agree with the long-term guidance or the analyst estimates.  The December 2008 quarter estimates of $1.30 EPS were $1.32 3-months ago.  The fiscal December-2009 estimates are $7.03 and that was $7.38 about 90 days ago.  Analysts have revenue estimates for last year at $1.22 billion and $1.99 billion for 2009.  Does more than 50% revenue growth and nearly 75% earnings growth sound overly optimistic?  It is possible, but there seems to be more risk of “errors to the downside” than positive surprises.

Right now there is a crack in the solar sector.  Shares have already been punished.  And punished hard.  But we are also seeing a run here on what is not good news, and in some cases, the stocks have been unfairly punished.

So we are very cautious on the sector. Guidance which may still be too aggressive.  Obama’s plans mayoffer some support if things start to get too bad.  The sector can’t implode.  But the two largest problems are lack of financing for many new projects and the notion that green energy projects are not at all competitive with energy prices anywhere around the current levels.

The ETF for the solar sector is the Claymore/MAC Global Solar Energy (NYSE: TAN) and it shows all of the sector woes in one spot.  This ETF volume has started drying up, and at $7.17 you can probably guess that it has been a dismal performer.  Its 52-week trading range is $5.40 to $30.79.  The sector will again have a day in the sun.  But the economy and credit markets need to be better, and ultimately it really does look like lower energy prices take away many of the ambitions of alternative energy.

Jon C. Ogg
February 12, 2009

NetJets, a subsidiary of Berkshire Hathaway (NYSE:BRK-A), unveiled details of a multifaceted initiative to address the environmental impact of the company’s flights and other operations and strengthen its response to climate change and other environmental challenges.  The company retained the services of Esty Environmental Partners, a leader in corporate environmental strategy.

Chicago Tribune reported that The City of Chicago has signed an $8.7 million contract to buy up to 300 hybrid vehicles made by Toyota (NYSE:TM): 100 Prius sedans, 100 Camry models and 100 Highlander SUVs from Northside Toyota in the next three years.

SunPower Corp. (NASDAQ:SPWR), a Silicon Valley-based solar manufacturer, today announced a new partnership with GRID Alternatives, a San Francisco-based nonprofit organization, to bring the power of solar energy to low-income families in need.

This is from earlier in the week, but worth a read.  The Erb Institute for Global Sustainable Enterprise at the University of Michigan today announced that many companies who voluntarily participate in the U.S. Department of Energy’s program to report reductions of greenhouse gas (GHG) emissions tend to have increased emissions but report reductions.

With oil hitting $80 a barrel, alternative energy is going to stay front and center regardless of any political issues around the topic.

Jon C. Ogg
September 13, 2007

As a reminder, whether you prefer the term "Global Warming" or "Climate Change" is not the issue as far as 24/7 Wall St. covers it.  Green business has become big business, and this affects many public companies today.