Large Cap Siemens AG Leaves Solar Business to ‘Specialized Companies’

Citing “sinking prices and  cutbacks in government support for solar-thermal projects,” Siemens AG announced this week that it was exiting from the solar power business but would continue its alternative energy focus on wind and hydro power, according to several newspapers including the Wall Street Journal (http://online.wsj.com/article/SB10001424052970203406404578072493375180894.html?KEYWORDS=siemens+vanessa for subscribers). The much publicized austerity measures throughout Europe, the glut of solar panels that have devastated market prices for panels and cutbacks in solar-thermal projects all played a role in this decision, the WSJ reported. 

Photo courtesy of Siemens AG

It was just three years ago that Siemens paid $418 million for Israel-based Solel Solar Systems as well as a stake in Italy-based Archimede Solar Energy, according to the WSJ report. The solar announcement comes on the heels of Siemens previous decision to shelve its nuclear power ventures.

Michael Suss, a Siemen energy division head, suggested that “only specialized companies” will thrive in today’s solar market. Siemens was focused on solar-thermal technology, “which unlike solar panels, uses the sun’s rays to heat water in large-scale projects, turning it into steam” to generate electricity.” the WSJ report noted. Siemens is apparently in talks to sell off the solar division of its business.

It was only a month ago we took a look at a few small cap solar stocks (call them “specialized companies”), which back then were struggling with many of the same issues as giant Siemens (73.5 billion Euros in annual revenues during its last fiscal year) and trying to keep from being delisted by Nasdaq and the NYSE. So let’s see what’s happened since.

Tempe, AZ-based First Solar (Nasdaq: FSLR, http://www.firstsolar.com/), which specializes in thin-film solar modules, is not a small cap but we include it anyway. FSLR closed Sept. 25 at $20.51. FSLR closed Oct. 23 at $23.31, down 49 cents, with a market cap of $2 billion.

Ontario, Canada-based Canadian Solar (Nasdaq: CSIQ, http://www.canadian-solar.com/ ), which sells a variety of solar products, closed Sept. 25 at $3.01 with a market cap of $130 million. CSIQ closed Oct. 23 at $2.61, up 1 cent, with a market cap of $112.6 million.

San Jose, CA-based SunPower Corp. (Nasdaq: SPWR, http://www.sunpowercorp.com/), which makes a wide variety of solar products and systems, closed Sept. 25 at $4.60 with a market cap of $547 million. SPWR closed Oct. 23 at $4.34, down 4 cents, with a market cap of $516 million.

China-based LDK Solar Co. (NYSE: LDK, http://www.ldksolar.com/) manufactures solar products and silicon materials. LDK closed Sept. 25 at $1.25 with a market cap of $167 million. LDK closed Oct. 23 at $0.88 with a market cap of $117 million.

China-based Trina Solar Ltd. (NYSE: TSL, http://www.trinasolar.com/) designs, manufactures and sells photovoltaic modules worldwide. It has a chart similar to many of the other solar stocks, which reached highs in the summer of 2011. TSL closed Sept. 25 at $4.47 with a market cap of $316 million. TSL closed Oct. 23 at $4.42, up 12 cents, with a market cap of $312 million.

China-based Yingli Green Energy Holding Co. (NYSE: YGE, http://www.yinglisolar.com/), which makes photovoltaic products including cells, modules and systems, closed Sept. 25 at $1.74 with a market cap of $272 million. YGE closed Oct. 23 at $1.72, up1 cent, with a market cap of $269 million.

China-based Suntech Power Holdings (NYSE: STP, http://am.suntech-power.com), the world’s largest producer of solar panels, closed at $0.92 on Sept. 25. STP closed Oct. 23 at $0.85, up 3 cents, with a market cap of $154 million.

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Struggling Solar Stocks at Risk of Being Delisted

The announcement this week that China-based Suntech Power Holdings (NYSE: STP), which bills itself as “the world’s largest producer of solar panels,” is at risk of being delisted by the New York Stock Exchange, cannot be good news for the solar industry. The announcement came about a month after Suntech founder Zhengrong Shi surprised analysts by stepping down as CEO. He remains Chairman and Chief Strategy Officer.

Suntech stock, which was trading for $2 the last time we checked in May, closed Sept. 25 at $0.92, down 9 cents for the

Photo courtesy of nrel.gov

day. Per NYSE rules, Suntech has six months following the NYSE warning (which came Sept. 10) to get its average stock price back up over $1 over a 30-day period.

China-based JA Solar (Nasdaq: JASO), which bills itself as “China’s largest solar-cell maker,” is also being threatened with a delisting. JASO announced Sept. 24 that it is seeking to strengthen its balance sheet by buying back $89.2 million of its debt. It last closed above $1 on Aug. 28. JASO closed Sept. 25 at $0.85, no change for the day.

This gloomy news prompted us to take a look at several other solar stocks we have followed in the past. They include:

 Tempe, AZ-based First Solar (Nasdaq: FSLR, http://www.firstsolar.com/), which specializes in thin-film solar modules, has bounced back from its year-long slide. FSLR traded as high as $142 during the summer of 2011, but fell down to $13.66 when we last checked in May. FSLR closed Sept. 25 at $20.51, 49 cents on the day.

Ontario, Canada-based Canadian Solar (Nasdaq: CSIQ, http://www.canadian-solar.com/ ), which sells a variety of solar products, has seen its stock price stabilize since December. Back in summer 2011 CSIQ traded for more than $12 but by last May it had dropped to $2.70 with a market cap of $117 million. CSIQ closed Sept. 25 at $3.01, up 2 cents on the day. It’s market cap is now $130 million.

San Jose, CA-based SunPower Corp. (Nasdaq: SPWR, http://www.sunpowercorp.com/) makes a wide variety of solar products and systems. SPWR stock in mid-May was trading for about $5. SPWR closed Sept. 25 at $4.60, down 14 cents on the day. Its market cap is now $547 million.

China-based LDK Solar Co. (NYSE: LDK, http://www.ldksolar.com/) manufactures solar products and silicon materials. LDK, which was trading for nearly $5 in late December 2011, dropped down to $2.85 in mid-May with a market cap of $373 million. It closed Sept. 25 at $1.25, down 4 cents on the day. Its market cap is now $167 million.

China-based Trina Solar Ltd. (NYSE: TSL, http://www.trinasolar.com/) designs, manufactures and sells photovoltaic modules worldwide. It has a chart similar to many of the other solar stocks, which reached highs in the summer of 2011. Since we have been watching it carefully, we have seen in close in August 2011 at $15.88, in December 2011 it had dropped to $7.39 and by mid-May 18 it was down to $5.70 with a market cap of $464 million. It closed Sept. 25 at $4.47, up 7 cents for the day. Its market cap is now $316 million.

China-based Yingli Green Energy Holding Co. (NYSE: YGE, http://www.yinglisolar.com/) makes photovoltaic products including cells, modules and systems. YGE closed in mid-May 18 at $2.52. It closed Sept. 25 at $1.74, up 5 cents for the day. Its market cap is now $272 million.

Solar Stock Winners Hard to Find following Tariff News on Chinese Solar Panels

For the U.S.-based solar power industry, the news on May 17 was what many panel manufacturers had been looking for: the U.S. Commerce Department announced it was slapping a high tariff on solar panels from China (http://www.nytimes.com/2012/05/18/business/energy-environment/us-slaps-tariffs-on-chinese-solar-panels.html?ref=business).

While it was certain to “infuriate” Chinese officials, according to the New York Times, just how good the news was for the industry was hard to tell. More importantly for our blog, what does this decision to impose antidumping tariffs of more than 31 percent on solar panels from China mean for solar stocks? Based on the early reactions of the stock market and the fact that the overall market has been hit so hard in recent days, the results are difficult to read.

First, however, some of the fine print. This is a preliminary decision , not set in stone, and it won’t actually go into effect until October, if at all. There is some talk that it would be retroactive to February 2012, however.

Second, solar panel manufacturers based in Taiwan, like AU Optronics Corp., which has become a big player in the thin film solar panel business, won’t be affected. Third, some of the Chinese manufacturers like Trina Solar (which has moved its manufacturing outside of China and won’t be affected) and Yingli announced that their retail prices would not be affected by the tariff. So it will be interesting to watch what the Commerce Department actually does, what it all actually means and how the market reacts.

In the meantime, here are how some randomly chosen solar stocks closed on Friday, May 18, a day after the news broke. If there were real winners, like U.S.-based First Solar and SunPower, it was hard to tell by stock price.  Most of the China-based companies took an initial hit, but then stabilized.

Tempe, AZ-based First Solar (Nasdaq: FSLR, http://www.firstsolar.com), which specializes in thin-film solar modules, continues a drastic slide that began a year ago. Many insiders say their costs are  just too high and margins too low to stop the decline. FSLR, which traded as high as $142 last summer, has fallen all the way down to small cap territory. It closed May 18 at $13.66, down $1.26 for the day. It’s market cap is only $1.2 billion.

Ontario, Canada-based Canadian Solar (Nasdaq: CSIQ, http://www.canadian-solar.com ), which sells a variety of solar products, has seen its stock price stabilize since December. Last summer CSIQ traded for over $12 but by late August it had dropped to about $6.75. It closed May 18 at $2.70, down 25 cents on the day. Market cap is now $117 million.

San Jose, CA-based SunPower Corp. (Nasdaq: SPWR, http://www.sunpowercorp.com) makes a wide variety of solar products and systems. Like the rest of the industry, SPWR stock is now trading near the bottom of its 52-week range ($4.94-$23.36) and its market cap has dropped to $601 million. SPWR closed May 18 at $5.08, down 51 cents on the day.

China-based Suntech Power Holdings (NYSE: STP, http://www.suntech-power.com/), makes photovoltaic products and provides construction services. STP stock tanked on the news, tried to rally back briefly early in the day May 18, but ultimately closed at $2.00, down 13 cents on the day.

China-based LDK Solar Co. (NYSE: LDK, http://www.ldksolar.com/)) manufactures solar products and silicon materials. LDK, which was trading for nearly $5 in late December, closed May 18 at $2.85, down 6 cents on the day. Its 52-week range is $2.54-$7.90 and its market cap is $373 million.

China-based Trina Solar Ltd. (NYSE: TSL, http://www.trinasolar.com/)) designs, manufactures and sells photovoltaic modules worldwide. It has a chart similar to many of the other solar stocks, which reached highs last summer but have been sliding for the most part since. It closed last Aug. 31 at $15.88 and by Dec. 23 it had dropped to $7.39. It closed May 18 at $5.70, down 38 cents on the day. Market cap is now $464 million.

China-based Yingli Green Energy Holding Co. (NYSE: YGE, http://www.yinglisolar.com) makes photovoltaic products including cells, modules and systems. YGE’s 52-week range of $2.75-$9.85 and its market cap is now $396 million. Like most of the other solar stocks, its best days were last summer. It closed May 18 at $2.52, down 28 cents on the day.

Solar Installations, Farms Catching On with Investors Big and Small

Don’t feel too badly if you are having trouble understanding the ups and downs of the solar industry. Take the Dec. 15 Business section of the Los Angeles Times, for instance. Right above to the headline “Grand Jury Investigating Solyndra,” and yet another story outlining the high-profile bankruptcy of the Fremont, CA solar panel maker despite $535 million in federal aid and $1.1 billion in venture capital backing, was another headline “Record Gains for Solar Industry” and a story noting that “solar power is a booming business in the U.S. ” along with statistics demonstrating the truly staggering growth of solar installations across the U.S. (http://www.latimes.com/business/la-fi-solar-growth-20111215,0,5390004.story).

But then you flip forward a few pages and there’s another report about solar panel maker First Solar, which fell 21.4 percent to $33.45 on Dec. 15, its lowest level in four years, after announcing its second restructuring in six weeks. First Solar, long considered a solar success story and the world’s largest solar company based on market cap (although its market cap has fallen almost 75 percent this year), released an earnings warning Dec. 14 suggesting that “downward pressure on solar panel prices and profit margins will continue ‘indefinitely,” according to the Financial Times.  The company’s basic problem is that there are too many solar panels on the market and countries in Europe, where solar is very popular, are cutting subsidies and will continue to do so.

“If you’re making solar modules, it’s very dicey out there. The prices keep going down, down, down,” said Philip Lawes, chief executive of Laguna Beach, CA-based Insoltech Solar.

But just go back a few weeks and you can read the reports about Google investing millions in solar power, and then there was last week’s news about Warren Buffett getting into the solar business for the first time. MidAmerican Energy Holdings, a unit of Buffett’s Berkshire Hathaway Inc., purchased the Topaz solar farm in California’s San Luis Obispo County from First Solar. Terms were not disclosed but the Wall Street Journal suggested Topaz was worth “more than $2 billion. If you scan the news further, you’ll see that Buffett isn’t the only one jumping into the solar farm business. First Solar and SunPower Corp. have been unloading their solar farms to some of the U.S.’s biggest utilities, including NextEra Energy, NRG Energy and Exelon Corp.

Lawes said the big investors like Buffett see long term income in the large solar farms.

“These solar farms, they aren’t glamorous, they aren’t going to be a home run, but they create a steady cash flow over the long term,” said Lawes, adding that Buffett’s company will enjoy that steady cash flow by selling the energy produced in the farms to a utility. “The utility companies aren’t going anywhere.”

Google and KKR must agree, since they recently announced a joint investment in four solar farms south of Sacramento, CA. The deal allows the solar farm developer and operator, Recurrent Energy, to raise cash and fund future solar farms. Recurrent has a 20-year contract with Sacramento Municipal Utility District to supply electricity to power 13,000 homes, according to a story in the Wall Street Journal.

There’s also opportunities for small investors, Lawes added. Entrepreneurs are approaching owners of commercial buildings offering in some cases to pay 15 cents a square foot for the use of their roofs. The entrepreneurs then install solar and sell the power to utility, just like the big guys with the big farms. “Typically, they just need a flat roof,” he said.

So, other than the big guys like First Solar, how are the smaller solar companies faring? Not that well if you are in the solar panel business.

China-based Suntech Power Holdings (NYSE: STP, http://www.suntech-power.com/), a smallcap that has boosted its market cap up to $423 million market cap in recent weeks, makes photovoltaic products and provides construction services. This stock closed on Oct. 20 at $2.07. By mid-day Dec. 23 it was trading at $2.34.

Ontario, Canada-based Canadian Solar (Nasdaq: CSIQ, http://www.canadian-solar.com/), which sells a variety of solar products, continues to decline. Back in late August it was trading for $6.74. At mid-day Dec. 23 it was trading for $2.85.

China-based LDK Solar Co. (NYSE: LDK, http://www.ldksolar.com/)) manufactures solar products and silicon materials. It, too, has bounced back from lows in late October of around $3. At mid-day Dec. 23 it was trading for $4.91, much closer to the highs of nearly $6 in late August.

China-based Trina Solar Ltd. (NYSE: TSL, http://www.trinasolar.com/)) designs, manufactures and sells photovoltaic modules worldwide. It’s now trading for less than half its Aug. 31 close of $15.88. By Oct. 20 it had declined to $7.15. It’s up from there, but not much. At mid-day Dec. 23 TSL stock was trading for $7.39.

Shanghai-based JA Solar Holdings Co. (Nasdaq: JASO, http://www.jasolar.com) makes solar cells and other solar

 

products and has hit by the downturn. On Aug. 31 its stock closed at $3.66; by Oct. 20 it closed at $2.14; at mid-day Dec. 23 it was trading for $1.39.

Solar Stocks May Be Struggling but Industry Is Creating Jobs

The solar industry in the U.S. may be struggling in a market laden with cheaper Chinese imports but you can’t say it isn’t creating jobs. In a report out this week, the The Solar Foundation, a non-profit, “non-lobbying organization” dedicated to increasing the adoption of solar energy (http://www.thesolarfoundation.org/), released its second annual review of the nation’s solar workforce, noting that hiring in the solar industry is increasing and and the industry now employs “more than 100,000 Americans.”  And employment in the industry is expected to grow by 24 percent in the next year, creating 24,000 jobs, according to the report, titled “National Solar Jobs Census 2011: A Review of the U.S. Solar Workforce.” 

 
The report also noted that the solar industry is increasing jobs nearly 10 times faster than the rest of the economy as a whole. The solar industry’s job growth rate as of August was 6.8 percent compared to the estimated overall economy rate of 0.7 percent. The report included more than 17,198 solar sites and 100,237 solar jobs in August nationwide.
 
The Los Angeles Times led its Business section Oct. 17 with the report because one in every four solar jobs is held by a Californian (http://www.latimes.com/business/la-fi-solar-jobs-20111017,0,3230671.story). Of the 100,237 solar jobs nationwide, an estimated 25,575 were in California. The next state in the rankings was Colorado, well back of California  with 6,186 solar jobs, followed by Arizona with 4,786. Then came Pennsylvania (4,703), New York (4,279), Florida (4,224), Texas (3,346), Oregon (3,346), New Jersey (2,871) and Massachusetts (2,395).
 
The other big solar-related news of the week was a trade complaint filed by a group of seven American solar panel makers accusing China of “receiving unfair government subsidies and dumping its products in the United States at below cost,” according to a report in the New York Times (http://www.nytimes.com/2011/10/21/business/chinese-solar-trade-case-has-clear-targets-not-obvious-goals.html?_r=1).
 
None of this seemed to stop the slide in stock prices of solar panel manufacturers which has been going on for months. Among the larger caps, Tempe, AZ-based First Solar (Nasdaq: FSLR, http://www.firstsolar.com/), the world’s largest maker of thin-film solar modules, rallied on Oct. 20, up $1.46 to $53.77. But this is a stock that has been as high as $175 this year and was more than $100 as recently as Aug. 31.
 
Some of the smaller caps included:
 
China-based Suntech Power Holdings (NYSE: STP, http://www.suntech-power.com/), a smallcap with a $373 million market cap which makes photovoltaic products and provides construction services, closed on Oct. 20 at $2.07. This stock was trading for $5.25 on Aug. 31 and $2.64 on Sept. 23.

Ontario, Canada-based Canadian Solar (Nasdaq: CSIQ, http://www.canadian-solar.com/), which sells a variety of solar products, closed Oct. 20 at $3.04, down 16 cents for the day. CSIQ was trading for $6.74 on Aug. 31 and $4.72 Sept. 23.

China-based LDK Solar Co. (NYSE: LDK, http://www.ldksolar.com/), which manufactures solar products and silicon materials, closed Oct. 20 at $3, down 13 cents for the day. This stock was trading at $5.71 on Aug. 31 and $3.40 Sept. 23.

China-based Trina Solar Ltd. (NYSE: TSL, http://www.trinasolar.com/), which designs, manufactures and sells photovoltaic modules worldwide, closed Oct. 20 at $7.15, down 17 cents for the day. It closed at $15.88 on Aug. 31.

Shanghai-based JA Solar Holdings Co. (Nasdaq: JASO, http://www.jasolar.com), which makes solar cells and other solar products, closed Oct. 20 at $2.14. It closed Aug. 31 at $3.66.

 

With Solar Power’s Future So Bright, Which Solar Stocks Are Oversold?

All the noise about the bankruptcy of privately-held Solyndra, despite the reported $535 million federal loan guarantee, could lead some to think that the solar industry is in trouble. That would, of course, be spectacularly wrong.

While shares in the publicly-traded solar equipment makers have been falling since Aug. 31, the day the bankruptcy was announced, the future of solar power has never been brighter, according to many experts including NRG President and CEO David Crane. He told Jim Cramer on CNBC Sept. 20 that while price of solar panels has dropped “precipitiously…within three to four years, the cost of solar power in at least half of the states in the U.S. will be less than drawing power off the grid.” Crane also added that solar panels represent “a billboard for what you stand for as a business owner. NRG is working with the Washington Redskins to build a 2 megawatt solar installation and solar plug-in stations in the parking lot of their stadium.

As has been noted recently, the problems Solyndra experienced were unique to the company and solar panel equipment makers in general. Basically, its solar panels were too expensive and cost more to install than its competitors. Yahoo News reported that the price for solar panels has dropped by about 42 percent this year alone due to, you guessed it, competition from China.

The problem with picking solar stocks, particularly the solar panel and equipment makers, will be finding which of the group will survive and enjoy the promising future of solar power. Let’s take a look at the stocks of several solar equipment makers and see what they have done since Aug. 31, the day the long anticipated Solyndra bankruptcy became official. They have all fallen sharply, but have they been oversold? If so, which ones?

One of the larger solar companies Tempe, AZ-based First Solar (Nasdaq: FSLR, http://www.firstsolar.com/), the world’s largest maker of thin-film solar modules with a $6.5 billion market cap, hit a four-year low Sept. 22, dropping all the way down to $66.85, then “rallied” on Sept. 23 to $70.24. First Solar’s most immediate problem is apparently its own federal loan program, which is facing new scrutiny due to Solyndra’s problems. FSLR sold for more than $100 as recently as Aug. 31 but has been mostly falling since that day when it lost $1.95 and closed at $99.98.

China-based Suntech Power Holdings (NYSE: STP, http://www.suntech-power.com/), which makes photovoltaic products and provides construction services, was trading for $5.25 on Aug. 31. On Sept. 23 it closed at $2.64, down 7 cents for the day.

Ontario, Canada-based Canadian Solar (Nasdaq: CSIQ, http://www.canadian-solar.com/), which sells a variety of solar products, was trading for $6.74 on Aug. 31. It closed Sept. 23 at $4.72, up 31 cents on the day.

China-based LDK Solar Co. (NYSE: LDK, http://www.ldksolar.com/) manufactures solar products and silicon materials. On Aug. 31 it closed at $5.71 and by the close of market Sept. 23 it had dropped to $3.40, down 7 cents on the day.

China-based Trina Solar Ltd. (NYSE: TSL, http://www.trinasolar.com/) designs, manufactures and sells photovoltaic modules worldwide. Its closing price Aug. 31 was $15.88, while on Sept. 21 it closed at about half that price, or $7.69, up 25 cents.

Shanghai-based JA Solar Holdings Co. (Nasdaq: JASO, http://www.jasolar.com) makes solar cells and other solar products. It closed the trading day Aug. 31 at $3.66. On Sept. 21 it closed at $2.20, up 10 cents on the day.

Solar Stocks Soar on Success of German Green Party

The surpising success of the Green Party in a German election March 27 sparked an across-the-board jolt for solar stocks March 28, some moving up more than 5 percent. Even smallcap Evergreen Solar (Nasdaq: ESLR, http://www.evergreensolar.com/), which has slumped for nearly the entire past 12 months, traded up nearly 4 percent to $1.34.

The Green Party’s success was attributed to the country’s “deep-seated aversion to nuclear power” and the recent earthquake and ensuing tsunami that damaged the Fukushima Daiichi plant has galvanized opposition,” according to the New York Times. Germany is one of the world leaders in solar power innovation and construction and investors apparently saw the advance of the Green Party as evidence that the country would renew its subsidies for the solar industry.

Other smallcap solar stocks on the move March 28 included China-based Renesola Ltd. (NYSE:SOL, http://www.renesola.com/) up 4.2 percent to $9.38; Canada-based Canadian Solar (Nasdaq:CSIQ, http://www.canadian-solar.com/) up 2.34 percent to $11.38; China-based Hanwha SolarOne Co, formerly known as Solarfun Power Holdings, (Nasdaq: HSOL, http://www.hanwha-solarone.com/) up 4.36 percent to $7.54; and China-based JinkoSolar Holding Co (NYSE:JKS, http://www.jinkosolar.com/) up 5.3 percent to $26.75.

The midcap and largecap solar stocks enjoyed the day’s trading as well. China-based Yingli Green Energy Holding (NYSE:YGE, http://www.yinglisolar.com/) was up 5.8 percent to $12.86; Tempe, AZ-based First Solar (Nasdaq:FSLR, http://www.firstsolar.com/) traded up 1.9 percent to $153.28; China-based LDK Solar (NYSE:LDK, http://www.ldksolar.com/) up 4.1 percent to $11.71; San Jose, CA-based Sun Power Corp. (Nasdaq:SPWRA, http://us.sunpowercorp.com/) up .8 percent to $16.53; China-based Trina Solar (NYSE:TSL, http://www.trinasolar.com/) up nearly 3 percent to $28.60