SunPower's accounting troubles are shedding light on the bigger problem: falling solar prices.
There's never a good time for an accounting mishap, but it sure looked bad when SunPower, the San Jose, Calif. solar panel maker and installer, announced in November unsubstantiated entries and underreported costs of $15 million at the time it was raising $418 million in equity and debt. Shares dropped 19%, and at least a half-dozen shareholder suits were filed.
It may be that SunPower ( SPWR - news - people ) simply has a bad accounting system. But it could also be that SunPower and other solar companies are feeling the heat of sharply dropping prices for solar panels and taking desperate steps to protect profits. SunPower's panel prices have dropped 28% since the beginning of 2007, but prices at the Chinese makers Suntech Power, Trina Solar ( TSL - news - people ) and Yingli Solar have dropped by half. Now SunPower is losing market share. In California, the nation's biggest solar market, SunPower's share has fallen to 17% so far this year, down from 22% last year. One of the biggest gainers over the same time period was Suntech, whose share rose to 12% from 5%. If SunPower doesn't slash prices further, it stands to lose more business.
Analyst Gordon Johnson of Hapoalim Securities thinks a struggle to keep Wall Street happy is leading to financial shenanigans throughout the solar industry....MORE