March 31, 2006
Solar Spin Offs Soar
The interesting part of watching the increased activity in M&A and IPO in the solar industry is how the valuations of the "parent" companies do once the spin off has occurred.
Global Solar was sold this week by Unisource Energy. Now normally, when one sells off a division that has been bleeding $20M of losses in a few years, we'd expect the market to breathe a sigh of relief and reward such a move with an immediate hike. No such thing happened to UNS. Yet I must express public kudos to Mike Gering (President of GSE) and Jim Pignatelli (Chairman of UNS) for giving Global the opportunity to grow through the sale to European owners. UNS kept some "skin in the game" with the option on shares, hedging a potential upside should the new owners truly make Global Solar shine (and I see no reason why they would not mimic their success in their home country of Germany).
A similar story is set with Cypress and Sunpower. Cypress Semiconductor leveraged the hot market to spin off a huge IPO recently. However the value of the shares it owns in Sunpower is NOT reflected in its own market valuation. Why is that?
ATS Automation, in Canada, is set to do the same thing with its Spheral Solar and Photowatt divisions. Its expected that the spin off could have a market cap in excess of the original parent.
Could it be that the market believes that solar valuations are overpriced today, tredding on emotion, and are set to come back down to earth? Or is it that the market simply doesn't know how to account for this situation yet, given the embryonic nature of the "solar stocks" and the market's relative uncomfort at how to value them as part of a "non-solar" entity?
I'm not sure of the answer, but what I do know is that the valuations achieved recently are amazing. When divisions of parents are bought by others at a high price despite losses, you could simply point to a mismatch of corporate cultures and ambition. Why does the new investor stand a chance of making something that was losing money profitable? Perhaps they have a vision and the energy (or stomach) to take something and invest further, where the original owner lost it.
Whatever the answer, (and I invite your comments please), the solar market continues to surprise, although we've seen a plateau reached in some stocks and others have simply relaxed their meteoric rise. In either case, we are witnessing an industry which is maturing and coming into its own.
Posted by sass at 09:18 PM | Comments (1)
March 22, 2006
Leveraging the blog..
My great friend Mitch Joel was recently featured in an article in the Montreal Gazette. Below is what was written about corporate blogs. Hopefully, I am following most of its advice:
What I take away is that most of what people really come back for is the information on the solar industry, ICP and technology in general (that's what the stats and comments are telling me). With 50% more people visiting my blog to date in March than in January06, I hope the messages I put forth are the reason why they come back.
The really interesting point of information is that back in January I used to "notify" a group which grew to about 150 contacts of certain new entries which I thought particularly relevant for them. However I stopped that practice in February and yet the visitors have in fact still grown. So either those people NEVER did visit the blog entry or even more people have joined the readership list. Either way, it doesn't really matter, so long as you the reader find what I write relevant. I know that sometimes its more personal than professional but it is after all MY personal record in public. So please forgive me if once in a while I simply direct a good wish or message of a personal nature.
Sass
Posted by sass at 05:46 PM | Comments (1)
March 21, 2006
Welcome back to Chuckie and A-man!
Two people who have over the years contributed not only to ICP's customer service levels but also our reputation for superior marketing are Charles Gelinas and Anthony Bejermi. Well..after a small time away from ICP...THEY'RE BAAAAAAAAAAAACK!
Just a quick note to welcome you tremendous duo back to ICP Solar. I am looking forward to working with you as we ascend to the pinnacle of extreme customer care and superior marketing efforts. If anyone ever "got it" at ICP Solar, you two were amongst that crowd. It's almost the same feeling one has with regards to customers. Its one thing to get one, its a whole other feeling to get one back. So far in 2005-2006, we're counting two of those (customers and team members) who have returned to ICP. Wonder if it's because they all missed me? NOT!
Sass
Posted by sass at 09:12 PM | Comments (0)
Sunsei Soars in Spring...
If the fingers are doing the walking, the wallets are doing the talking. I cannot believe the uptake in sales per store with the new branding, products and word-of-mouth PR that is spreading like wildfire about SunseiTM.
Its like something I've never seen before. The quality of the products, the support and the branding efforts across several levels, are all having a tremendous effect (in some cases TOO positive). As with the grid market where customers are now paying "reservation fees" just to have manufacturers keep their orders ahead of others, we are finding customers now willing to "prepay" months ahead just to bring stock in early so as to ensure availability. Those that have provided forecasts obviously took care in such a market situation but who was to know this would happen so quickly!
I must say that our team is also pulling off miracles and our clients are also being patient with us. Its also interesting that while some merchants have chosen to offer many of the same models they listed three years ago, those that have moved forward to newer more efficient, more attractive and better supported products are seeing the greater effects of a more educated consumer. People actually KNOW about degradation, shading, balance of system components far more than they use to. In some ways, the trade buyers have some catching up to do with their own consumers. All points to a tremendous year for anyone in solar, even for those offering lesser products, simply due to the demand, supply, awareness and every other factor under the sun.
Sass
Posted by sass at 09:01 PM | Comments (0)
March 20, 2006
Silicon Reality Check
If anyone doubted the effect of a few bits of silicon, see the effect in the past two days on the Evergreen market cap tumble. A simple hiccup like raw material supply issues has caused a huge drop in value in just two days. Evergreen even paid a deposit to reserve feedstock and yet MEMC is not to supply all that it had contracted to do.
Evergreen now must try to find another way to get raw materials into its feedline otherwise have machines stop and labor get an extended "smoking break". All continues to point to the fragility of a supply line dependant on the scraps of the microchip industry. He who solves this one is a big winner...and there are a more than a few of the disruptive technology guys laughing (in private of course) at this sequence of events.
Evergreen will surely recover as this does not significantly impact long term view on the company, yet it does exarcerbate the fragility of the situation for anyone dependant on silicon feedstock.
Sass
Posted by sass at 06:01 PM | Comments (3)
March 15, 2006
Thin Film Future Thoughts (TFFT)...
While over 90% of solar cell output today is silicon based, a number of growing startups, plus some companies that have been in the business for a long time are now starting to promote thin film as the saviour of the industry (no silicon feedstock shortage issues) in many ways.
Whereas thinfilm cannot be beat for cost per watt of module, the issue lies in the fact that thick film TODAY is costing more and more to make. That is primarily due to the nature of the process but also the cost of spot silicon feedstock today (over $60 per kilo!).
The issue also brings to the forefront the issue of "real world performance". Every test ever done shows that thin film amorphous gives up to 25% more power per "rated watt" in real-life conditions vs. crystalline. This becomes much more evident when you are being rewarded for the amount of power feeding back into the grid than when there is no such measure. A recent survey in California proved that people don't install solar systems to save energy, they do it to save money! So the faster they turn back the meter, the happier they are.
The industry is going to go through radical change in the next two years. Disruptive new thin film technologies combined with lower silicon based cells, combined with increased worldwide demand is going to make the solar industry the next BIG THING. Being a part of it is so exciting. You get up each day knowing you affect the world in a good way. The question is only which horse to ride and that simply depends on which race you are in. Like so many other industries, we'll have our Macs and PCs, our Ferrari-branded Acers and our Dells. The issue is not whether there is opportunity for thinfilm to grow as a percentage, but only how many of the races it will win.
Sass
Posted by sass at 11:17 PM | Comments (0)
March 09, 2006
Solar Psychology
Ever taken a psychometric test? These are usual given by personnel search agencies in order to gauge candidates appropriateness for positions they are mandated to fill. Well, I took my first one this week and man was it revealing!
Apparently, I'm a social animal, who loves to create and lead. It didn't really tell me anything I didn't already know and perhaps placed "in my face" other facts that I need to think about, yet I believe it's accuracy proved its worth for anyone who'd want to hire me! You'd know you were dealing with an independant thinker who doesn't mind going out of the box to find the right solution. Perhaps not as pragmatic as I should be, dreaming is something I'm apparently good at! (This reminds me of a time in school when I had to write an essay about why I should have been paying more attention in class!).
This test had three answers for the questions with the middle answer being a "?" which indicated to me that I did not agree enough with any of the answers posted to put a check mark near them. If the issue was about honesty in choosing what I felt was the "right" answer, then I guess I checked that mark a few times more than others because the results pointed out to the recipient of these results that they should investigate this further. I guess they're trying to eliminate the potential that I have an underlying psychosis which has yet to surface!
The people who had me do the test were yet more potential "investors" in ICP Solar. As I've said before, any company with a global presence, making its own solar cells in a supply-strapped environment and a list of "who's who" in clients buying its extremely attractive and creative product offering, is an attractive takeover target. And yet, there's the fact that I love this industry so much which keeps me wanting to hold onto it (even a small piece) just to be involved.
My father told me of someone he knew who makes money "for every partner he has". That is the right model to follow. It's the key to any sustainable partnership and in of itself will lead to more partnerships.
With the public markets pricing solar companies into the stratosphere, if you have a good story, you'll get partners. And ICP has a good story now, so I must be patient enough to find the right partners...and do them right.
Sass
Posted by sass at 08:31 PM | Comments (0)
March 04, 2006
Solar Soaring Valuations...
If you've been reading my blogs about solar valuations, I have felt for some time that valuations had hit their peaks or that the wild increases were to abate. Having invested in some of the solar companies, there's nothing more than I would like to see than continued sharp rises.
Nevertheless, that is not sustainable and the issue becomes not "whether" there will be a sobering period, but "when". Despite all the added business in solar, there will be consolidation as small players are taken out. They will left to work in niche markets (such as ICP SOLAR currently does) or wiped out if their game is in the arena of the big boys.
So this brings me back to the current scenario where companies are at 40times earnings and then again...most solar companies don't make money. Here begs the question..if you own stock in a public company in the solar business and you don't cash out now, are you a fool?
I think the answer lies in the business model which they have or will have in the future. If the company you've invested in is able to carve itself out a niche, then it can stand out from the noise and continue to actually soar even when the commodity plays are crashing due to oversupply. So will there ever be oversupply? Well, have you ever known a market that NEVER caught up? Not me.
This is business. Take out the emotion and figure it out. Then pick the stocks that will have a distinction which will carry them through a glut. Either a better production model or marketing model. Its one of those two that will mark the survivors of the future solar industry.
Sass
Posted by sass at 02:45 PM | Comments (1)
March 01, 2006
Spring is in the air
Well we can definitely feel winter's last hurrah as March comes in. People are getting that "itch" they feel as winter's days get longer and we can sense that warmer weather is a round the corner.
If we look at all the publicity surrounding solar in the past months, it should bode for an extremely strong "boomerang" as people now are tuned into the other applications of solar such as recreational or portable power. I suspect we'll also see renewed vigor in the publicity campaigns of retailers wanting to cash in on this trend.
With Arnold doing his thing so well in California, I suspect the USA is the market to watch this year. Traditionally shortages of panels have been caused due to the large programs in Europe. It will be interesting to monitor short term supply and the demand spikes that all of this new interest is bound to create for SunseiTM.
"Waking up each day as if it was on purpose" is the attitude that resolves issues and creates opportunities. The solar industry has finally awoken to the challenge and the power of the people will drive it to even greater heights as it boosts its' ability to satisfy demand.
Sass
Posted by sass at 09:18 AM | Comments (0)