Tough Times for Thin Film Solar Makers
Two U.S. manufacturers of thin film solar cells based on cadmium telluride have been having a tough couple of weeks.
Tempe, Arizona-based First Solar put out a sobering fourth quarter earnings report. While sales were up a bit from last year's quarter - to almost $2.8 billion, the firm reported a net loss of almost $40 million, compared to net income of $664 million for the fourth quarter of 2010. First Solar used the last quarter of the year to take a big goodwill impairment charge of $393 million - residue of acquisitions of OptiSolar and NextLight.
Without the goodwill charge and some restructuring charges, the quarter still brought in less profits than the previous year's quarter. Going forward, the company cut its 2012 guidance on net sales to $3.5 billion-$3.8 billion from $3.7 billion-$4 billion. First Solar stayed firm on an earnings forecast of $3.75-$4.25 per share.
But other issues are haunting First Solar - the company's filing with the SEC says that it is spending more than expected on warrantee replacements of solar panels deployed in hot climates. And it has a new head of investor relations after an internal investigation of company leaders who may have improperly disclosed that First Solar would not receive a DOE loan guarantee for a large utility solar installation due to not making a deadline for application. Its SEC filing said that the SEC was now investigating the issue (the loan news negatively affected First Solar's stock price).
Meanwhile, Abound Solar, which makes solar cells similar to First Solar, but is a smaller firm, recently said it would lay off 180 workers in Colorado. It plans to shift manufacturing to a more efficient production line, and says the workforce action is temporary. House Republicans have already been asking DOE why the company received a $400 million DOE loan guarantee for its manufacturing operations in Indiana.
First Solar and Abound Solar will go on, in spite of these hiccups. But they will continue to struggle to compete against traditional crystalline silicon solar cells because the latter have gone down in price by close to 40% in the last year. Thin film modules are well liked - First Solar is doing well with utility scale projects. But the firms have to move very quickly to increase efficiencies while decreasing production costs. To do so, they will have to stop work on older production lines - and they may have to do so abruptly or they will lose money on each module they sell.