Tuesday, June 1, 2010

"Will Sunpower Make It?" (SPWRA; SPWRB)

It's not as if the company will fold tomorrow. Back in late March we reported on their $200Mil. debenture offering. Last week had some good news for the company.
Here's the latest from Greentech:

What Does the Future Hold for SunPower?
The high-efficiency solar maker is at a crossroads.

Will SunPower make it?

For the past six or seven months, that's been one of the primary questions in the solar market. Will the pioneering manufacturer of high-end, high-efficiency solar panels succumb to competitors or somehow pull through.

First, the dismal take. SunPower appears stuck in an unenviable spot. It competes against First Solar, which can offer lower prices, for utility-scale contracts. In the residential market, it must contend with Suntech Power Holdings and a raft of other Chinese manufacturers that (a) can produce products for less and (b) are increasing the efficiency of their products.

To top it off, the distinguishing mark of SunPower's products -- high efficiency -- is butting up against the walls of physics. Crystalline silicon solar panels can, in theory, convert 29 percent of the light that strikes them into electricity, but the real number is closer to 25 percent, SunPower CEO Tom Werner told me last year.

By the end of 2010, SunPower will be at 23 percent efficiency. Further gains will be more difficult to achieve, and this situation is already forcing the company to examine things like concentrators and different materials for making solar cells, which to date have had virtually no success in the market.

Wall Street analysts are continuing to gripe about the company. For all these reasons, we picked SunPower as a Top Ten Acquisition Target in greentech in 2010.

Now, the optimistic argument. SunPower remains one of the most innovative companies in what can sometimes be a fatally conservative market. Two years ago, it launched a consumer branding campaign emphasizing the distinctive look of their panels. Now, branding and marketing are becoming bigger issues in solar; see Akeena's recent deal to license the Westinghouse name.

SunPower has also become one of the most successful panel makers to date to expand into developing utility-scale solar parks. Besides improving solar cell efficiency, the company has devised new racking and installation techniques. Last month, for instance, it unveiled Oasis, a modular power station in a box, adapting a concept in part pioneered by SunPods and going mainstream with it. To get to the low end, the company has launched a set of modules made from components from other suppliers....MORE

Here are some of our recent posts:

More Love for SunPower (SPWRA; SPWRB)

"SunPower Completes Euro 44.5 Million Financing for Expanding Italy's Largest Solar Power Park" (SPWRA; SPWRB)

Are the Option Bears too late on Sunpower? (SPWRA; SPWRB)

"[Auriga's] Bachman Thinks SunPower Could Be Attractive Acquisition - Ups To HOLD" (SPWRA; SPWRB; TSL; WFR)

"SunPower Announces Proposed Offering of Senior Cash Convertible Debentures" (SPWRA; SPWRB)