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First Solar Changes: ‘This really is not like Solyndra.’

Phoenix Business Journal; Patrick O'Grady, Reporter

Changes at the top of First Solar’s executive team this week have raised new questions about the solar manufacturer as it seeks to keep its place atop the industry hierarchy.

first solar panelRob Gillette stepped down as CEO Tuesday, and the company announced in a brief statement that Mike Ahearn, a co-founder and chairman, would return to the CEO role on an interim basis.

Ted Meyer, the company’s vice president of corporate communications, said the company had no further comment beyond the statement. The move comes just eight days before Tempe-based First Solar (Nasdaq: FSLR) is scheduled to release its third-quarter earnings.

The move left analysts who watch the company concerned. First Solar has been one of the drivers of lowering photovoltaic panels with its thin-film modules, but Chinese competition has flooded the solar panel market. Gillette, speaking at an Arizona solar gathering earlier this month, said solar module prices have dropped 35 percent in the past year, but it still was bullish on First Solar’s opportunities.


Jim Kelleher, an analyst with Argus Research Group in New York, said the industry has been hit by lower prices and the specter of Solyndra, a California-based photovoltaic company that filed Chapter 11 bankruptcy about 18 months after receiving a federal loan guarantee for $535 million.

“This really is not like Solyndra,” Kelleher said of First Solar. “This is a real company with real revenues.”

The challenge for investors is what the leadership change will mean. Gillette isn’t the first executive to leave the company recently. Bruce Sohn, the First Solar’s former president of operations, left in April. Jens Meyerhoff, its former CFO and utility business operations head, stepped down in September.

Any time there is a shakeup in high-level leadership, it sends out warning signs, said Weston Twigg, an analyst with Pacific Crest Securities in Portland, Ore. Having several over the past year is even more stressing.

“It’s a little alarming the rate of executive turnover they’ve had,” Twigg said.

Investors took the news of Gillette’s departure hard, sending the company’s stock down more than 25.3 percent to $43.27 at the close of trading on Tuesday.

Twigg said the market and rapidly falling solar panel prices have put pressure on company margins. Combined with less demand, there now is a surplus of panels with no destination.

“There’s been this downward pressure on subsidies on companies worldwide and that’s impacted demand,” he said. “At the same time, you have a lot of excess capacity.”

The pressure from Chinese companies has become such that several solar companies were filing a petition with the U.S. International Trade Commission and the U.S. Department of Commerce asking them to look into firms dumping solar panels to drive down the price.

First Solar was not part of the petition and issued a statement this week saying it prefers fair and open trade.

First Solar has several projects in development in the U.S., including utility-scale developments in California and Arizona.

Patrick O'Grady reports on technology, solar energy, utilities, manufacturing, aerospace, defense, sustainability, telecommunications, the Arizona Corporation Commission and other related topics.

 

Read More at Phoenix Business Journal and read Gary's latest blog on this issue.

 
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