Ominous Solar News: Job Cuts (SOLR)
December 12, 2008 by Douglas A. McIntyre
It was not that long ago when traders and investors were making a fortune investing in the new endless growth instrument: blazing hot solar stocks. If you have followed this sector, you have seen how many of these stocks have fallen 60%, 70% and some by even 90%. But today, GT Solar International, Inc. (NASDAQ: SOLR) did something worse than the other companies facing slowing orders. It cut jobs.
It is only 25 employeesand is said to be in the Merrimack solar furnace operations. Thecompany says that "all other segments and at the company’s otherlocations are being maintained at full strength based on continuedstrong demand for its polysilicon reactors."
But the GT Solar also says that this "reduction was related to slowerdirectional solidification system (DSS) furnace production rates overthe next six months as a result of the slower economy and severalcustomer requests in this environment to delay shipments of DSSfurnaces under existing contracts."
The company also says that this lower capacity was reflected in thecompany’s guidance already given in November. It also said that it hasso far not received any order cancellations. This shouldnot be a surprise. We have seen many solar companies reduce their expectations for 2009. But technically and realityfrequently do not prevent any shock factors from catching people bysurprise.
This stock has been public only a few months and ranks among thepoorest IPO performers in 2008. This may have been reflected in theprior numbers and may be reflected in the shares as the stock tradesunder $3.00.
What is not reflected here is the poor PR that is going to come fromthis action. You can imagine the headlines at local news stationstomorrow:
- "Wasn’t Solar Power Safe?"
- "Obama’s Growth Industry Contracting"
- "Burning Solar Power Employees"
- "New Economy, No More Climate Change"
Whatever the story is, the last time we have seen a layoffannouncement come this quick since an IPO was from the dot.com stocks which came public in the spring and summer of 2000.
Extremely low oil prices is taking its toll in many areas investors thought would be immune from the economy and immune from politics.
Jon C. Ogg
December 12, 2008
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