While Sharp posted higher net revenues THANKS to its solar division (in part), Evergreen Solar recorded higher losses (despite higher sales) in its first quarter. Evergreen’s stock was set back to its February 06 levels, while Sharp’s increased.
In both cases, the revenues were higher than expected, yet the interesting difference is how the companies’ bottom lines are being managed. Evergreen has not yet had one full year of positive gross margins, yet it continues to participate in new technology funding and new ventures (ie. EverQ). Sharp on the other hand, has reached profitability despite some funding towards thin film facilities (nothing revolutionary, just standard thin film materials).
At some point, investors in Evergreen are going to want to see a decrease in R&D and sustainability in profits. I hope the management has that in mind. I have tremendous respect for them and their accomplishments to date. Partnering with Qcells is something that ICP Solar has done as well, as they are masters at manufacturing models. They can’t hope to be the next “Amazon” or “Ballard” because those two commanded such market leads, that taking on huge losses for a few years was ok. In the solar industry, Evergreen does not command such a lead.
In general, the solar stocks have stopped the meteoric rises, the question becomes who is going to adjust downwards more than the rest. I would submit that those taking focused or more conservative (ie. traditional) approaches to business will suffer the least in a corrective stage.
Sass