Energy Conversion Devices (ENER) Blows Up
One of these days I need to really start making money on the short side in solar; this sector has caused me so much pain on the long side it would only be fitting in terms of karma. We just touched on the troubles in solar this weekend (
Mar 14, 2009: NYT: Europe's Way of Encouraging Solar Power Arrives in U.S.) and lo and behold Energy Conversion Devices (ENER) comes out in after hours with a large guide down, and some drastic measures such as consolidation of employment and production lines. Not exactly something you'd expect from the "green energy" job sector of tomorrow - right President Solar? Hmmm...
They also pulled guidance - while concurrently assuring us that everything is fine and this is just a short term blip ;) Please note the chart below is BEFORE the 27% carange in after hours - and ENER was considered one of the best performing solar stocks in the sector. Yikes.
Via
Reuters
- U.S. solar company Energy Conversion Devices (ENER) on Monday slashed its revenue view for the quarter and said it would slow expansion plans due to weak demand for solar power in the United States, sending its shares down 25 percent in extended trade.
- The company also withdrew its forecast for 2009 and said it would consolidate some production and cut about 70 jobs.
- ECD, which makes lightweight, flexible solar laminates for rooftops and buildings that convert sunlight to electricity, called Monday's announcement "short-term," saying the company was bullish on U.S. demand due to a government economic stimulus plan that includes incentives for solar projects.
- "In the U.S. market things have been slow," Chief Executive Mark Morelli said on a conference call with analysts. "We anticipate a very big pickup in the U.S. market, but that stimulus has yet to flow through."
- ECD executives also argued that the company's strong balance sheet and differentiated products would allow it to weather the recession better than many solar players. (that was the theory anyhow) The company's so-called thin film products are made from amorphous silicon and unlike traditional solar panels, do not rely on costly crystalline silicon as their primary raw material.
- To prevent inventories from building up, ECD said it would implement a two-week production hiatus effective March 22. It has also postponed equipment orders and hiring for its Battle Creek, Michigan facility, which is under construction.
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