First Solar Rumored to Attract Big Name Buyers
First, the metrics.
FSLR’s price has seen a 76% fall this past year, the largest in the S&P500; the last crushing decline came post December 14, when it wound down forecasts for 2011 and 2012 and threw all analysts’ estimates out the window. Its market cap stands at $2.64 billion, a far cry from the heady days when it sported a valuation of $25 billion. At this valuation, it is lower than 94% of clean energy companies, which have a market cap north of $1 billion. Though it is the world’s largest thin film solar panel manufacturer, First Solar’s shares closed December 19 at a record low of 0.65 times book value. The stock has been pulverized under a short sale position of more than 17 million shares, almost 20% of its outstanding shares. In October, the company fired its CEO and installed Michael Ahearn, the founder and chairman in the interim.
Can it get worse?
Aside from the fact that the stock is crying out for a short squeeze, there really is some logic to why GE (NYSE:GE) or Siemens may like to buy out the company.
First, it uses cadmium-telleride in its panels, which make the panels more efficient to manufacture on the time and energy fronts. Second, its new focus on larger power plants instead of the smaller, rooftop installations may sit well with these majors. Next, in spite of panel prices falling 47% this year, the company is still profitable.
“Given the pull back in the price, it certainly does make a lot more sense for someone to buy out First Solar,” said Jeff Bencik, a New York-based analyst for Kaufman. “At the end of the day, First Solar is still profitable. So you are buying the best in the industry at a discount price. Certainly for both GE and Siemens it would diversify their energy platform.”
Spokesmen for Siemens (NYSE:SI) and GE refused to comment.