Commerce preliminarily determined that Chinese producers/exporters sold solar cells in the United States at dumping margins ranging from 31.14 percent to 249.96 percent.

By ITA’s definition, “dumping occurs when a foreign company sells a product in the United States at less than fair value.”

Two Chinese companies, Suntech Power Holdings Co. Ltd. (NYSE: STP) and Trina Solar Ltd. (NYSE: TSL), will have to pay “dumping margins” (tariffs) of 31.22% and 31.14%, respectively. An additional 59 companies and subsidiaries, including Canadian Solar Inc. (NASDAQ: CSIQ, Hanwha Solarone Co. Ltd. (NASDAQ: HSOL), Yingli Green Energy Holding Co. Ltd. (NYSE: YGE), LDK Solar Co. Ltd. (NYSE: LDK), Jinkosolar Holding Co. Ltd. (NYSE: JKS), and JA Solar Holdings Co. Ltd. (NASDAQ: JASO), will pay dumping margins of 31.18%.

The government of China has already rejected the findings, and the Associated Press reports that a Commerce Ministry official said, “The U.S. ruling is unfair, and the Chinese side expresses its extreme dissatisfaction.”

In reality, the Chinese got off easy. The dumping margins are set at the absolutely lowest end of the scale. In March the Commerce Department hit the Chinese makers with tariffs of less than 5%, far below the 100% tariff demanded by SolarWorld and its co-complainants.

The Commerce Department even left the Chinese makers a way out:

Modules, laminates, and panels produced in a third-country from cells produced in the PRC are covered by this investigation; however, modules, laminates, and panels produced in the PRC from cells produced in a third-country are not covered by this investigation.

So China can move its solar cell manufacturing to Thailand or the Philippines or Vietnam, re-import the parts to China for final assembly, and sell the finished goods in the US without penalty, and presumably at whatever price the manufacturers want.

The largest part of the US solar industry is also likely to be dissatisfied by the preliminary ruling. Companies like Real Goods Solar Inc. (NASDAQ: RSOL) and SolarCity — which has filed for an IPO — have been able to turn low prices for solar panels into a healthy installation business. US solar makers First Solar Inc. (NASDAQ: FSLR), SunPower Corp. (NASDAQ: SPWR), and MEMC Electronic Materials Inc. (NYSE: WFR) all own their own project management and installation businesses as well.

Yesterday’s ruling by the ITA is a not much more than a loss of face to China’s makers, while it could be a real job-killer in the US. Anyone who believes that manufacturing solar cells and modules in the US will become a massive industry probably also believes in the Easter Bunny.

A final ruling on the case is not due until November, and appeals are possible — and likely — fairly quickly.

The ITA’s preliminary ruling is available here.

Most Chinese solar stocks are trading higher in the pre-market this morning. That should tell you all you need to know about this ruling.

Paul Ausick

The unofficial closing bells put the DJIA down 156 points to 12,442.49 (-1.24%), the NASDAQ fell more than 60 points (-2.10%) to 2,813.69, and the S&P 500 fell -1.50% or nearly 20 points to 1,304,87.

There were several analyst upgrades and downgrades today, including Dell Inc. (NASDAQ: DELL) raised to ‘neutral’ at Sterne Agee; IntercontinentalExchange Inc. (NYSE: ICE) raised to ‘strong buy’ at Raymond James; SINA Corp. (NASDAQ: SINA) raised to ‘overweight’ at Barclays; Visa Inc. (NYSE: V) reiterated as ‘buy’ but removed from Conviction Buy List at Goldman Sachs; Deere & Co. (NYSE: DE) reiterated as ‘buy’ with target price of $96 at Argus.

Earnings reports since markets closed last night have led to some price changes as of the last half hour of trading today: Bon-Ton Stores Inc. (NASDAQ: BONT) is down -7.3% at $4.09; Dollar Tree Inc. (NASDAQ: DLTR) is down -5.6% at $95.60; E-Commerce China Dangdang Inc. (NYSE: DANG) is down -16.6% at $6.25 (more coverage here); GameStop Corp. (NYSE: GME) is down -10.1% at $18.72 (more coverage here); Sears Holdings Corp. (NASDAQ: SHLD) is up 3.9% at $52.84; and Wal-Mart Stores Inc. (NYSE: WMT) is up 4.7% at $61.97 (more coverage here).

On Friday we are scheduled to get earnings from ANN Inc. (NYSE: ANN), Brown Shoe Co. Inc. (NYSE: BWS), JA Solar Holdings Co. Ltd. (NASDAQ: JASO), Progressive Corp. (NYSE: PGR), and Footlocker Inc. (NYSE: FL).

Other standouts from today include the following stocks:

Rosetta Genomics Ltd. (NASDAQ: ROSG) is down -17.7% at $4.11. The medical diagnostics firm priced a secondary offering this morning. More coverage here.

Dendreon Inc. (NASDAQ: DNDN) is down -11.3% at $7.65. The company’s prostate cancer drug got another challenge from a competing product from Johnson & Johnson (NYSE: JNJ). More coverage here.

MEMC Electronic Materials Inc. (NYSE: WFR) is down -21.4% at $1.68 after posting a new 52-week low of $1.63. The solar component maker lost its CFO today. More coverage here.

Stay tuned for Friday. We don’t have anything on the schedule for tomorrow, but that doesn’t mean that we’ll have a quiet day.

Paul Ausick

News on Wednesday night showed that Chief Financial Officer Mark Murphy is leaving the company to rejoin a position at Praxair.  The news is on the heels of previous report showing a major loss due to poor solar materials sales. Does the notion that MEMC named Brian Wuebbels as executive vice president and CFO help?  Not really, even if Murphy will act as a “consultant” during the transition period.

Losing a CFO is not as bad as losing a founder and not as bad as losing a CEO, but the problem with losing a CFO is that Wall Street assumes that the CFO has lost faith in the future of the company. In some cases, it could mean something far worse.  With MEMC shares having fallen from over $90 during teh solar boom down to under $2.00 it is easy to wonder if things are going from just awful to even worse.

So, here is where we cannot help but wonder about MEMC’s future.  Thomson Reuters expects a loss of -$0.10 EPS in 2012 on sales of $2.6 billion.  But almost magically in 2013 the consensus is back up to $0.45 EPS on $2.83 billion in sales.  The revenues in 2011 were $2.715 billion, in 2010 they were $2.239 billion, and 2009 revenues were $1.163 billion.  The problem is that sales in the solar sector are getting harder and harder to come by and the solar sector is in total disarray.  The company’s latest loss and decline in revenues also reflected weak demand in the semiconductor wafer markets.  Yep, MEMC is facing a war on two fronts and its non-GAAP margins are getting squeezed.

The sector leaders are looking like hell frozen over.  First Solar Inc. (NASDAQ: FSLR) is effectively at all-time lows if you discount a small 2% gain today.  SunPower Corporation (NASDAQ: SPWR) is down over 75% since Total SA (NYSE: TOT) bought the controlling interest.

If the company was on the verge of a great turnaround then the CFO would seemingly not have pulled the ripcord on the way down here.  The company has what looks to be ample cash reserves to fund operations, but it also has significant amounts of long-term debt. This situation just feels like it is one which is going from awful to far worse.

MEMC is in serious trouble.  Still, it is one of these outfits that has enough cash to fund operations for probably quite some time, but its core businesses are challenged and the company has so far been unable to get its operating costs in order.  It has also forecast a weaker demand for semiconductor materials in 2012 as well as a lower price per watt in solar.  Our big concern is that the projections may have been based entirely upon the CFO forecasts just a week or so ago, and his departure would bring even the lower guidance into question.

For whatever this is worth, Wunderlich Securities cut its target down to $1.00 after it maintained a SELL rating after the most recent earnings.

It is too soon to declare that MEMC will be a total implosion.  It is even possible that there could be a turnaround of major proportion coming here.  Unfortunately, that does not appear to be the case any time in the immediate future.

So you tell me in a poll, no “I don’t know” answers allowed…

JON C. OGG

MEMC named Brian Wuebbels as its new CFO. Wuebbels has been with MEMC in various roles since 2007. His previous experience came at Honeywell International Inc. (NYSE: HON) and General Electric Co. (NYSE: GE).

Investors are treating the switch as yet another signal that MEMC is a sinking ship. Shares are off more than -18%, at $1.74 after posting a new 52-week low of $1.67 earlier. The previous range was $2.07-$10.64. After the announcement last night shares only fell by a penny. That situation changed fast this morning.

Paul Ausick

The unofficial closing bells put the DJIA up nearly XX points to XXX (XX%), the NASDAQ rose more than XX points (XXX%) to XXX, and the S&P 500 rose XX% or nearly X points to XXX.

There were several analyst upgrades and downgrades today, including Oracle Corp. (NASDAQ: ORCL) cut to ‘hold’ at ThinkEquity; National Oilwell Varco Inc. (NYSE: NOV) maintained ‘buy’ with a lowered target price of $90 at Argus; 3M Co. (NYSE: MMM) cut to ‘market perform’ at Bernstein; Teva Pharmaceuticals Industries Ltd. (NASDAQ: TEVA) cut to ‘hold’ at Needham; and JDS Uniphase Corp. (NASDAQ: JDSU) raised to ‘buy’ at UBS.

Earnings reports since markets closed last night have led to some price changes as of the last half hour of trading today: AMC Networks Inc. (NASDAQ: AMCX) is up 2.4% at $40.58; ArcelorMittal (NYSE: MT) is up 1.9% at $16.42; Harvest Natural Resources Inc. (NYSE: HNR) is down -1.6% at $5.71 after posting a new 52-week low of $5.44 earlier today; Kohl’s Corp. (NYSE: KSS) is down -4.6% at $48.52; and Windstream Corp. (NASDAQ: WIN) is down -10.3% at $10.10 after posting a new 52-week low of $9.42 earlier today.

On Friday we are scheduled to get earnings from Dillard’s Inc. (NYSE: DDS), Jinkosolar Holding Co. Ltd. (NYSE: JKS), Nvidia Corp. (NASDAQ: NVDA), Progressive Corp. (NYSE: PGR), ReneSola Ltd. (NYSE: SOL), and Uranium Resources Inc. (NASDAQ: URRE).

Other standouts from today include the following stocks:

Monster Beverage Corp. (NASDAQ: MNST) is up 9.2% at $71.34 in a 52-week range of $32.35-$83.96. The energy drinks company posted strong results, but buyout rumors continue to lead the charge. More coverage here.

MEMC Electronic Materials Inc. (NYSE: WFR) is down -24.3% at $2.46 after posting a new 52-week low of $2.41 earlier today. The solar component supplier posted bad results and a weak outlook. More coverage here.

We also took a detailed look today at short interest in a number of stocks — big names, volume leaders, and cult stocks.

Stay tuned for Friday. Dallas Fed President Richard Fisher is giving a speech. We have noted the following events on the schedule (all times Eastern):

• 8:30 a.m. – Producer price index
• 9:55 a.m. – Reuters/University of Michigan consumer sentiment

Your email address

subscribe

terms and conditions

Paul Ausick

Solar panel makers like First Solar Inc. (NASDAQ: FSLR), SunPower Corp. (NASDAQ: SPWR), Suntech Power Holdings Co. Ltd. (NYSE: STP), and Yingli Green Energy Holdings Co. Ltd. (NYSE: YGE) have watched panel prices erode about -50% in the last year. Polysilicon prices have dropped -70% and companies like MEMC simply can’t reduce costs fast enough to keep up with collapsing demand and a race to the bottom on polysilicon prices.

MEMC’s adjusted gross margins for the quarter were down to 10% from 11.6% in the previous quarter and full year 2011 margin of 18%. Perhaps the worst news of all for the company is that its SunEdison division which designs and installs solar PV systems installed new projects totalling 49 megawatts in the first quarter, down -55% sequentially and -11% year-over-year.

The company also forecast somewhat weak revenue growth for the second quarter and a revenue drop for the full fiscal year. The company said its sales volume for the full year would be more than 400 megawatts and that second quarter volume would be 130-170 megawatts. Taking a midpoint of 150 megawatts and first quarter sales of just 47 megawatts, that estimate indicates expected growth in the second half of the year. MEMC better hope so.

Shares of MEMC are down -24% today, at $2.47 after posting a new 52-week low of $2.46 earlier. The prior 52-week range was $3.20-$11.31.

Paul Ausick

Westinghouse Solar is a designer and manufacturer of integrated rooftop solar power systems, and CBD is an Australian diversified renewable energy company.  Margaret Randazzo is currently the CFO of Westinghouse Solar and she was also appointed Interim CEO as former CEO Barry Cinnamon is leaving the company.  CBD anticipates that it will shift to a U.S. listing upon the closing of the merger and it plans to list its common shares on that NASDAQ.

The press release noted that the initial meetings about a merger took place in December of 2011.  It is now May and we cannot help but to wonder whether or not other solar companies have considered mergers.  Here are two of the easy observations in the broader solar sector:

First Solar, Inc. (NASDAQ: FSLR) is now at all-time lows and has remained profitable so far despite shares being down 90% from last year’s highs.  It is now only worth about $1.4 billion and it would be considered a busted IPO if the move happened faster.

SunPower Corporation (NASDAQ: SPWR) is already majority-owned by Total SA (NYSE: TOT) and it trades at about 75% under where Total took its stake of almost $1.4 billion.  The entire market cap including the majority stake held by Total is only $628 million.

LDK Solar Co., Ltd. (NYSE: LDK) is in China and now only worth $360 million.  There have been takeover rumors before in this name but the China base and woes in China right now probably make it difficult for a non-Chinese player to acquire the company.

MEMC Electronic Materials Inc. (NYSE: WFR) is a name which used to come up regularly in the takeover rumor category, although it has been so battered that getting approval might be impossible after 95% losses from the peak.  It is now worth only about $764 million in market cap.

We would note that Energy Conversion Devices was also always a ‘merger rumor name’ in solar but it went bankrupt.  There is no assurance that other solar mergers are on the horizon, but these companies might want to start thinking about stock mergers which could still give holders upside if the combined companies turn around and thrive again.

To show just how bad things are, the Guggenheim Solar (AMEX: TAN) ETF trades at $21.09 and it has lost one-third of its value since its reverse split.

Westinghouse shares closed at $0.40 and its 52-week trading range is $0.26 to $2.75.  The market value was only $6.66 million as of Tuesday’s close.

Your email address

subscribe

terms and conditions

JON C. OGG

If you combine the losses in the major stocks around solar, wind, and other alternative energies, the losses are billions and billions of dollars in the American companies alone.  We have outlined the profile of each exchange traded fund and we have covered some of the losses elsewhere.  We have tracked 20 stocks in a portfolio over the last year in the alternative energy sector and it is shocking that only 4 of the 20 stocks are not down by more than 50% from their 52-week highs.  It is even worse that 10 of the 20 stocks are down by at least 70% from their 52-week highs if you include the implosions.

We used FinViz performance metrics for the returns, or a lack of returns.  We counted the assets under management directly from each ETF’s website, although we would note that outflows of assets have been seen on top of absolute losses in share price.

First Trust Global Wind Energy (AMEX: FAN) is full of mostly foreign issue holdings and even the king of wind power called Vestas in Europe only has about a 6% weighting with other names coming from Europe and China.  On Friday morning it was trading at $7.17 versus a 52-week range of $7.09 to $12.20.  The loss here over the last year is about 38%.  Assets under management: $24.8 million

First Trust NASDAQ Clean Edge Green Energy Index (NASDAQ: QCLN) is very thinly traded and at $10.10 on Friday it has a 52-week range of $9.00 to $17.02.  It aims to track the NASDAQ Clean Edge Green Energy Index and is supposed to invest at least 90% of assets in common stocks that comprise the index.  Some names are not exactly what investors might consider as green, but Cree, Inc. (NASDAQ: CREE) and Tesla Motors, Inc. (NASDAQ: TSLA) are each weighted more than 7%.  The loss here is 36.6% over the last year.  Assets under management: $18.7 million

Guggenheim Solar (AMEX: TAN) is full of solar stocks which are both domestic and also trade as ADRs from foreign issues which you probably know well if you follow the solar sector.  It invests at least 90% of its assets in common stocks which make up the MAC Global Solar Energy Index.  At $22.77, the 52-week trading range is $22.00 to $88.70 and this has lost 69% over the last year.  Assets under management: $60.7 million

Market Vectors Solar Energy ETF (AMEX: KWT) is also full of solar stocks, but many do not trade in the United States.  The Van Eck Global ETF aims to track the Ardour Solar Energy Index and puts at least 80% of its assets into common stocks in the index.  At $3.39 it has a 52-week range of $3.29 to $13.08 and this one is down 69.9% from a year ago. Assets under management: $12.7 million

PowerShares Global Wind Energy (NASDAQ: PWND) is thinly traded and aims to track the NASDAQ OMX Clean Edge Global Wind Energy Index.  The ETF is full of companies which are not US-based and which are not even traded in the U.S. markets. The top 5 names account for more than 40% weighting and the names are China Longyuan Power Group, EDP Renovaveis, ENEL Green Power, Vestas Wind Systems, and China High Speed Transmission Equipment.  At $6.49, its 52-week range is $6.41 to $11.29, and the shares are down 40.8% from a year ago. Assets under management: $13.4 million

PowerShares WilderHill Clean Energy (AMEX: PBW) invests in all forms of clean energy and invests in companies globally.  Eight of ten of its largest weightings do trade in the U.S. and it invests 80% of its assets into common stocks in the WilderHill Clean Energy Index.  At $5.15 it has a 52-week trading range of $4.80 to $10.38 and it is down over 46% over the last year.  Assets under management: $181.1 million

The only good news about the current value of more than $300 million ETFs above is that they have at least not fallen anywhere near as much as some of the key companies which Americans have tried to invest their retirement and speculative money in.

First Solar, Inc. (NASDAQ: FSLR) is down over 84% over the last year and it still has a market value of $1.8 billion.  The loss here is about $8 billion over the last year in what is supposed to be America’s best solar bet.  First Solar generated $2.76 billion in sales in 2011.  It is currently among the worst stock charts in technology.

SunPower Corporation (NASDAQ: SPWR) received a huge purchase of a majority stake by Total but that has not kept its shares from sliding and sliding.  At $5.62, its 52-week range is $4.94 to $22.36, and shares are down over 63% over the last year and Total is down probably about 70% in value on this one.  Its market value is now barely $650 million but it generated over $2.1 billion in sales in 2011.

MEMC Electronic Materials Inc. (NYSE: WFR) is down 69% over the last year and at $3.50 its 52-week range is $3.31 to $12.00.  Its market value is still more than $800 million and its total revenue in 2011 was $2.71 billion.  The loss is far worse when you consider that this was a $90 stock at the peak of the alternative energy and oil boom in 2008.

The losses here have been in the billions and it only scratches the surface on the alternative energy sector losses.  This takes no consideration of the disappearance of Evergreen Solar, Energy Conversion, Solyndra, and Solar Trust.  This also skips over the ethanol losses as well. We do not want to only seem one-sided here even if billions upon billions of real money has been lost in the alternative energy sector that is reminiscent of the losses after the dot-com bubble burst a decade ago.  Some of the blame may be austerity and Chinese dumping, but investor losses do not come with an asterisk in the monthly statements.

The losses in alternative energy are massive, but oil companies have generated trillions of dollars in sales. Exxon Mobil Corporation (NYSE: XOM) is worth $401 billion in market value and sales for all of 2011 were $486.4 billion.  Chevron Corporation (NYSE: CVX) is worth about $203 billion in market value and it generated $253.7 billion in sales in 2011.  This also marks the two-year anniversary of the BP PLC (NYSE: BP) oil spill in the Gulf of Mexico, and BP generated the equivalent of $375 billion in sales in 2011.

It is sad to make jokes about losses this big, but a couple quickly come to mind:

• Alternative energy stocks and ETFs have turned 401K plans into 201K or 101K plans.
• How do make a small fortune? Take a large fortune and buy some alternative energy funds.

JON C. OGG

Now the deal with Exelon Corporation (NYSE: EXC) appears to have been funded by the Department of Energy and that start one monster covering effort by short sellers that is carrying over again today.  The stock’s move to above $23.00 amounts to a 15% move if you include the 7.7% move today.  That is nothing considering how much the drop has been as this was above $150 earlier last year.

A review of the NASDAQ short interest showed some 21.23 million shares short at the most recent settlement date (March 15).  That is not the largest absolute share count in the short interest and it certainly is not the highest “dollars short” by any means, but it is still a large bet against the company.

A rising industry leader causes all ships to rise and we are seeing that today.  SunPower Corporation (NASDAQ: SPWR) is up 7% at $5.95 on thin volume and MEMC Electronic Materials Inc. (NYSE: WFR) is up 10% at $3.67 on heavy volume.  Guggenheim Solar (NYSE: TAN) is up 4.5% at $23.17.

JON C. OGG

Things are so bad that even the Guggenheim Solar (NYSE: TAN) hit a new low today and the $23.99 is under the prior reverse split-adjusted 52-week range of $24.20 to $88.70 today.  PowerShares WilderHill Clean Energy (NYSE: PBW) is at least diversified in alternative and clean energy, but it is still down 1% at $5.45.  SunPower Corporation (NASDAQ: SPWR) is down 2.5% at $6.095 and MEMC Electronic Materials Inc. (NYSE: WFR) is down 3.3% at $3.475 on the day.  MEMC is at a new year low as well, but SunPower still is 20% or more above its 52-week low.

It is not just investors who have to worry here about solar loans.  The taxpayer is on the hook for a lot with First Solar vie DOE loans.  It is interesting that Wall Street is calling for $4.01 EPS on near-30% sales growth to almost $3.6 billion for 2012 and $4.29 EPS on 12% sales growth to $4.02 billion in sales in 2012.  Margins in the sector have been compressing to the point that we just do not even believe these earnings estimates.  How could we believe the earnings estimates any longer?

We would note that it was in February when Axiom Capital’s Gordon Johnson called First Solar a “Sell” and he went on to call the stock possibly a total write-off as it will start to lose money next year.  That is not a call that an implosion is imminent, but long-term could be very different.  Jim Cramer on CNBC has also warned that he has the ultimate fears in First Solar.

It is hard to keep pounding on this sector leader, but the chart is telling you that things are not just bad at First Solar.  They must be growing to dire circumstances.  This stock keeps hitting lower and lower lows.  Any rally seen in recent weeks has been promptly sold.  The taxpayer is on the hook here along with investors.

European austerity measures are going to continue.  The solar dumping charges with met with tariffs that were almost not worth mentioning.  Chinese solar panel firms have subsidies that allow them to sell below local costs.

In all of the past articles we have never mentioned that First Solar was challenging the all-time lows, but that now appears to be the case.  After looking back at a MarketWatch article, First Solar’s IPO priced at 20 million shares for $20 per share after having increased in size and increased in the price range.  After the IPO, the stock opened up at $24.50 and closed at $24.27 back in November 2006.

We did not even bother mentioning the management vacuum that the company is in.  Solyndra appears to just be the tip of the iceberg here. Look at the Yahoo! Finance chart below, if you dare.

JON C. OGG