There has been a lot of fuss recently about the Solyndra debacle. About a year
ago, President Barack Obama toured the solar energy company and touted its
photovoltaic systems as a perfect example of so-called "cleantech" growth
that would create high-tech, high-paying jobs. Unfortunately and despite a $535
million loan guarantee from the Department of Energy Solyndra filed for
bankruptcy this month, terminating all 1,100 workers. To make matters worse, the
FBI recently raided offices, and now Congressional hearings are revealing very
sloppy spending in the wake of Uncle Sam's endorsement. We can debate the
Solyndra failure as a talking point for the 2012 election another time. What
investors really should be concerned with is the dark clouds gathering over the
entire solar sector. Just take a look at the performance at some of the biggest
names in the solar sector: Evergreen Solar (PINK: ESLRQ ) plummeted to about a
dollar in late 2010 as it tried to restructure its debt. Now it trades for about
a nickel after a 1-for-6 split in January and has been relegated to the pink
sheets. That recent flop would be bad enough, but when you consider that shares
traded for an adjusted price of $12 or so at this time in 2009, the losses look
even uglier. Evergreen filed for bankruptcy in August to try and scrape together
the $485 million it owes creditors and soon will disappear forever. First Solar
(NASDAQ: FSLR ) is the "leader" among pure-play solar stocks in the U.S.,
with a market capitalization of almost $6 billion. FSLR stock is down 48% since
Jan. 1, 2011. The leader by most measures in the industry, First Solar saw its
profits slashed by more than half from $159 million to $61 million – as
Europe's debt woes resulted in subsidies being slashed. Adding insult to
injury, Axiom Capitals Gordon Johnson slashed his price target for the stock
from $75 to $35. That's another 50% decline from here, and barely a tenth of
First Solar's peak share price of $317 in 2008. Sunpower (NASDAQ: SPWRA ) is
next in line among the larger domestic solar players. Its stock has performed
"better" than First Solar in 2011, down about 30% in 2011. However, since
its peak valuation in 2007 over $130, the stock has flopped almost 95% to under
$9 a share as of this writing. Why? Volatile revenue and profit performance
makes for a risky bet and the fact that SPWRA is cruising towards a
third-straight quarterly loss has investors leery. What's more, long-term debt
of more than $500 million and total liabilities pushing $1 billion mean
there's not a lot of room for error considering the company's $900 million
market cap. There are serious hurdles to growth, considering the very expensive
nature of solar panel manufacturing facilities on top of current debt loads.
Those are three specific stories of three well-known U.S. solar companies
proving Solyndra's implosion didn't take place in a vacuum.
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