First Solar, Inc. Announces 2008 Fourth Quarter and Year-end Financial Results (FSLR)

I don't think it will be enough, we'll have to see what the guidance is.
Press release via Yahoo Finance:

First Solar, Inc. (NASQAQ: FSLR) today announced its financial results for the fourth quarter and fiscal year ended, December 27, 2008. Quarterly revenues were $433.7 million, up from $348.7 million in the third quarter of fiscal 2008 and up from $200.8 million in the fourth quarter of fiscal 2007. Revenues for the fiscal year ended December 27, 2008 were $1,246.3 million, up from $504.0 million in fiscal year 2007.

Net income for the fourth quarter of fiscal 2008 was $132.8 million or $1.61 per share on a fully diluted basis, compared to net income of $99.3 million or $1.20 per share on a fully diluted basis for the third quarter of fiscal 2008. Net income for the fourth quarter of fiscal 2007 was $62.9 million or $0.77 per share on a fully diluted basis.

Net income for fiscal 2008 was $348.3 million or $4.24 per share on a fully diluted basis compared to net income of $158.4 million for fiscal 2007 or $2.03 per share on a fully diluted basis.

First Solar will discuss these results and expected results for fiscal 2009 in a conference call scheduled for today at 2:30 p.m. MST (4:30 p.m. EDT). Investors may access a live audio web cast of this conference call in the Investors section of the company’s website at http://www.firstsolar.com. An audio replay of the conference call will also be available approximately two hours after the conclusion of the call. The audio replay will remain available until Friday, February 26, 2009 at 9:59 p.m. MST (11:59 p.m. EDT) and can be accessed by dialing 888-266-2081 if you are calling from within the United States or 703-925-2533 if you are calling from outside the United States and entering access ID number 1325337. A replay of the web cast will be available for 90 calendar days, approximately two hours after the conclusion of this call.

Are natural gas producers in denial?

March Natural gas was recently at $4.226, up .1229.
From the Financial Post's Trading Desk blog:

While global economies continue to weaken, natural gas production appears to be growing despite soft demand and the threat of liquefied natural gas heading to the U.S. this summer without a home.

Many producers in the exploration and production space have made more than one round of spending and production cuts for 2009. Their primary concern is liquidity, while the sentiment in the oil patch is that the current downturn will be worse than previous cycles in the recent past.

But despite this negative backdrop, recent earnings updates show guidance for positive natural gas production growth this year. This has prompted Canaccord Adams to ask: Are natural gas producers in denial?

Analyst Irene Haas explains that producers are still generating cash based on the money hedges put in place during 2008. Others are drilling to secure new leases.

“In our view, the U.S. gas market will not establish equilibrium until 2010,” Ms. Haas said in a research note. “We expect more negative revisions to production guidance in the upcoming months.”>>>MORE

Junk-rated Financials, Utilities Likely to Lead Next Bull Market

From Standard & Poor's via Research Recap:

Standard & Poor’s thinks speculative grade financial and utilities companies are the most likely to lead the rally in the next bull market.

S&P says sectors that perform best going into a bear market typically perform worst coming out if it, and vice versa....MORE

For details by sector see: Which Equity Sectors And Companies Will Lead The Next Bull Market?

Are we About to See the World's Biggest Head-and-Shoulders Formation?

FT Alphaville wasn't making that point when they posted this chart but it is one of those things that make you say "Hmmm".

The DJIA - 1956 to 2009 (Click to enlarge - without the scribblings).

Big, BIG Solar Projects

Yesterday I decided against posting on NRG's utility-scale solar deal with eSolar.
eSolar is privately held (Google.ORG, idealab and Oak Investment Partners) and NRG would be spending rather than receiving the money. Today though, BNET had an interesting piece "NRG and eSolar Join a Growing List of Utility-Scale Solar Projects" that I wanted to bookmark:

...The latest, announced yesterday, is NRG Energy, a New Jersey-based utility, making a deal for eSolar technology to build 500 megawatts of generation in California.

The deal follows hot on the heels of one pairing Southern California Edison and BrightSource Energy, the latter of which added 1,300 megawatts of solar power to its already-planned amounts. But what do these big deals mean?

They’re spurred by the need of California’s utilities, the other large one being Pacific Gas & Electric, to meet state requirements requiring that 20 percent of their energy be from renewables by 2010 (the next step will likely be 33 percent by 2020). However, the utilities are being smart. For the most part, they’re letting other companies do the building; instead, the utilities are only signing contracts to buy power, usually at market rates.

If they miss the 2010 deadline, then they’ll be fined, but not enough to cause serious pain — at least, not more serious pain than taking on the risk of developing unproven renewables promises.

But there’s no shortage of other companies willing to take on that risk. There are 16 solar projects for which the Bureau of Land Management has received a plan of development (POD) to produce 1,000 megawatts of or more:

Bull Frog Green Energy: 5,000 megawatts (two plants at 2,500 each) of solar panels
Boulevard Associates: 4,000 megawatts (four plants at 1,000 each) of solar thermal
Iberdrola: 2,500 megawatts (two plants at 1,500 and 1,000) of solar thermal
Optisolar: 2,205 megawatts (two plants at 1,205 and 1,100) of solar panels
Ewind Farm: 1,700 megawatts of solar thermal
Stirling Energy Systems: 1,631 megawatts of solar thermal
FPL Energy: 1,200 megawatts of solar thermal
Solar Investments: 1,000 megawatts of solar thermal
Power Partners Southwest: 1,000 megawatts of solar thermal
Cogenitrix / Solar Investments: 1,000 megawatts of solar thermal

These all add up to about 21 gigawatts of energy, while all the projects on the BLM’s big list total almost 49GW. Most of the projects would be located in California or nearby; for reference, the state has a total energy requirement of about 63GW in the summertime, according to the Energy Information Administration.

In short, the numbers don’t add up. There are far more projects in the works than the region’s energy needs, or transmission lines, can support. That doesn’t mean the big announcements will stop....MORE

The Berkshire Hathaway Arbitrage (BRK.A: BRK.B)

As a followup to yesterday's "Buffet Urges Investors to Read Graham’s Chapters 8 and 20 in Times of Financial Crisis (but wait, there's more!)", Market Movers brings a pair trade to our attention (it's not a classic arbitrage as the "B" shares are not good delivery for the "A"):

...Now the B shares have 1/30th of the economic value of the A shares, but only 1/200th of the voting rights. They began the week worth about 1/31 of an A share, and ended it worth less than 1/32 of an A share. Given that the seeming arbitrage persisted all week, the market might well be starting to value those A-share voting rights.

"In my opinion," says Warren Buffett, "when the B is at a discount of more than say, 2%, it offers a better buy than the A." Right now the discount is a whopping 7%. So if you want to take Buffett's advice, start buying up B shares. If, that is, you want to buy his stock in the first place. Which is a different matter entirely....SOURCE

We are conversant with the issue. From Berkshire Hathaway (oops, just noticed that Mr. Salmon has the link to the memo, here it is anyway):

Memo

From: Warren Buffett
Subject: Comparative Rights and Relative Prices of Berkshire Class A and Class B Stock
Date: February 2, 1999 Updated July 3, 2003

Comparison of Berkshire Hathaway Inc. Class A and Class B Common Stock

Berkshire Hathaway Inc. has two classes of common stock designated Class A and Class B. A share of Class B common stock has the rights of 1/30^th of a share of Class A common stock except that a Class B share has 1/200^th of the voting rights of a Class A share (rather than 1/30^th of the vote). Each share of a Class A common stock is convertible at any time, at the holder’s option, into 30 shares of Class B common stock. This conversion privilege does not extend in the opposite direction. That is, holders of Class B shares are not able to convert them into Class A shares. Both Class A & B shareholders are entitled to attend the Berkshire Hathaway Annual Meeting which is held the first Saturday in May.

The Relative Prices of Berkshire Class A and Class B Stock

The Class B can never sell for anything more than a tiny fraction above 1/30^th of the price of A. When it rises above 1/30^th, arbitrage takes place in which someone ¾ perhaps the NYSE specialist ¾ buys the A and converts it into B. This pushes the prices back into a 1:30 ratio.

On the other hand, the B can sell for less than 1/30^th the price of the A since conversion doesn’t go in the reverse direction. All of this was spelled out in the prospectus that accompanied the issuance of the Class B.

When there is more demand for the B (relative to supply) than for the A, the B will sell at roughly 1/30^th of the price of A. When there’s a lesser demand, it will fall to a discount.

In my opinion, most of the time, the demand for the B will be such that it will trade at about 1/30^th of the price of the A. However, from time to time, a different supply-demand situation will prevail and the B will sell at some discount. In my opinion, again, when the B is at a discount of more than say, 2%, it offers a better buy than the A. When the two are at parity, however, anyone wishing to buy 30 or more B should consider buying A instead.

Nasa loses its first CO2 satellite after launch failure

Like most Americans, I assume that getting stuff out of the atmosphere is NASA's core competency. Maybe not.
From the Times of London:

Nasa has lost the centrepiece satellite of its $280 million climate-change mission after a catastrophic launch failure today.

The carbon dioxide-monitoring satellite was fired on a rocket from Vandenberg Air Force Base in California, but after blasting through the Earth’s atmosphere it fell short of its orbiting height.

A Nasa spokesman at the launch site said: “The mission has been lost. We don’t have any details at this moment. There’s an investigation under way.”>>>MORE including video.

AIG’s Plan To Bleed The Government Dry (AIG)

In late afterhours trading the stock was at $0.50, down from it's 52 week high of $52.50 and it's eighteen-month high of $72.61.
From 24/7 Wall Street:

Management at AIG (AIG) has calculated exactly how much money the Treasury and Fed will have access to after all of the TARP, financial stimulus, and mortgage bailout projects have been funded. The insurance company then plans to ask for whatever is left to fund its deficits so that it can stay in business, effectively making the federal government insolvent.

According toCNBC, AIG is about to post another huge loss. “Sources close to the company said the loss will be near $60 billion due to writedowns on a variety of assets including commercial real estate.” The financial channel also reports that the need for capital may be so great that AIG might have to enter Chapter 11, something the government has spent over $130 billion trying to prevent.

Just like Detroit, Bank of America (BAC), and Citigroup (C), AIG is playing a game of chicken with Washington that the government does not feel it can afford to lose. Imagine what it would be like if all of these businesses failed at the same time.

It is actually worth imagining. The government has so many balls in the air between the financial systems and deteriorating parts of the industrial sector that it may not have either the capital or intellectual capacity to go around. The Treasury has just appointed a prominent investment banker to help oversee the mess in Detroit, but it would take an army of financiers to first comprehend and then advise on what should happen to GM (GM) and Chrysler. The period for comprehension is already in the past. The trouble in the auto industry has to be addressed in the next few weeks or its capacity to operate will go up in flames....MORE

"I see one-third of a nation Over-housed, Over-clad, Over-nourished."

I think I understand why the Obama administration didn't invite me to contribute to Tuesday's speech.

If you recognize the parody but can't place it, here's FDR's Second Inaugural Address.

Sen. Reid To Offer Bill Giving FERC New Transmission Powers

As a follow-up t0 Friday's post "Ruling gives power line authority back to states", From Dow Jones via CNN Money:

The U.S. government would gain broad new powers to determine where to build transmission lines that link renewable energy to the electric system under legislation to be unveiled by the Senate's top Democrat this week.

The measure is likely to step up a long-simmering debate about the federal government's role in upgrading the U.S. transmission system.

Projects to bring wind, solar and geothermal power from remote areas to big cities have been hamstrung amid layers of regulatory hurdles. But speeding up the process by giving the federal government eminent domain - the power to seize land - could carry its own political peril if residents feel that the U.S. is insensitive to local needs.

Senate Majority Leader Harry Reid, D-Nev., plans to roll out the legislation this week, according to an aide. His efforts would mesh with growing calls from both environmentalists and U.S. business for Congress to concentrate more power in the hands of the federal government, something which would undercut state and local power....MORE

I think I owe someone a Hat Tip on this but can't for the life of me, remember who. If you linked first, drop us a line, we'll do what's right.

Buffet Urges Investors to Read Graham’s Chapters 8 and 20 in Times of Financial Crisis (but wait, there's more!)

UPDATE, The Berkshire Hathaway Arbitrage.
Original post:
Mr. Buffett's 2008 Letter to the Shareholders of Berkshire Hathaway will be released Saturday, February 28. We'll have commentary.
From Roseman Eruptions:

...According to Buffett, mentored by legendary investor Benjamin Graham (1894-1976), now is the optimal time to read or review The Intelligent Investor, published by Graham in the 1930s.

Buffett was recently quoted suggesting investors should read chapters 8 and 20 – especially useful in the midst of the worst financial crisis in 75 years.

Nobody is immune to losses in this market. Even the great Buffett is taking big hits. And he’s still a “buy and hold” investor sitting on a vast portfolio of global investments that have remained a fixture in Berkshire Hathaway for years, if not decades.

Still, timing is everything. An investor in Berkshire Hathaway since 1998 has not earned a profit. That should change soon as the Mother of all bear markets draws to a conclusion before the year is through.

From Humble Student of the Markets, some net-net working cap and net cash names:

Deep value plays

As S&P 500 earnings have started their collapse (see articles here and here), there has been a debate about whether this market constitutes good value. From a bottom up basis, however, I am seeing values that I haven’t seen in a long time.

Screening on net-net working capital

Using the free data from the Yahoo! finance website, I wrote a program that screened an investment universe that is roughly equivalent to the Russell 3000 members. The test is: stocks that trade below net-net working capital (current assets less all liabilities and preferred) and has positive trailing 12 month earnings. The net-net working capital requirement is a classic Ben Graham deep value criteria. The earnings test represents an additional margin of safety of corporate viability.

I got 39 names. Even if I threw out the microcaps (market cap below $100 million), I still got 13 stocks that passed the test:

Adaptec Inc (ADPT), Cynosure Inc (CYNO), Fuqi International Inc (FUQI), Horsehead Holding Corp (ZINC), Ingram Micro Inc (IM), Movado Group Inc (MOV), Olympic Steel Inc (ZEUS), PC Connection Inc (PCCC), Shoe Carnival Inc (SCVL), Skechers U.S.A. Inc (SKX), Tech Data Corp (TECD), Tecumseh Products Co (TECUA) and Volt Information Sciences Inc (VOL).

Stocks trading below net cash...MORE

Dow Industrials Trading below 2002 Lows

With a half hour to go the DJIA is trading near it's lows of the day at 7148 and below the low of the 2000-2002 bear, 7286.
Should the DJIA close at this level it would erase all gains since it's first close above 7200, 7,214.49, on Cinco de Mayo, 1997.

Saudi Muslim cleric warns that biofuels [ethanol] could be sinful

From the CSM's Bright Green blog:

A prominent Muslim scholar in Saudi Arabia has warned that those using alcohol-based biofuels in their cars could be committing a sin.

The warning was issued by Sheikh Mohamed Al-Najimi, a member of the Islamic Fiqh Academy, an institute that studies Islamic jurisprudence for the Organisation of the Islamic Conference, an international group with a permanent delegation to the United Nations. According to the Al Arabiya News Channel, an international news outlet is based in Dubai, United Arab Emirates, Mr. Najim directed his warning to Saudi youths studying abroad.

Al Arabiya notes that Najimi stressed that this warning was not an official fatwa, or religious edict, just his personal opinion. Najimi added that the issue “needs to be studied by the relevant religious bodies.”>>>MORE

Short GM to Zero: Obama Auto Team Drives Imports

The stock was recently $1.86 up nine cents.
From the Detroit News:

The vehicles owned by the Obama administration's auto team could reflect one reason why Detroit's Big Three automakers are in trouble: The list includes few new American cars.

Among the eight members named Friday to the Presidential Task Force on the Auto Industry and the 10 senior policy aides who will assist them in their work, two own American models. Add the Treasury Department's special adviser to the task force and the total jumps to three....MORE

First Solar: Earnings Tomorrow; Collins Stewart Cuts Ests (FSLR)

The stock was recently down $6.70 (5%).
From Tech Trader Daily:

First Solar (FSLR) shares are trading lower ahead of the company’s Q4 earnings report, which is due after the close tomorrow.

Collins Stewart analyst Daniel Ries this morning trimmed his forecasts for the company. For ‘09, he now sees revenue of $2.072 billion, down from $2.178 billion, with EPS of $7.62, down from $8.10. For Q1, he goes to $1.45, from $1.57, with shipments of 203 MW, down from 212 MW....

...Meanwhile, Caris Co.’s Ben Pang this morning repeated his Buy rating and $170 price target on the stock. He contends the company is likely to meet consensus estimates for Q4, and that the focus will be on 2009 revenue guidance. He thinks they will repeat their previous forecast of $2 billion to $2.1 billion. “This would provide some evidence that the solar space is stabilizing and revive hope that the stimulus package can re-accelerate growth....MORE

Deutshe Bank Valuing GE Capital at Zero (GE)

From 24/7 Wall Street:

Deutsche Bank Slashes Price Target On General Electric (GE); Valuing GE Capital at Zero, Sees Further Equity Injections

...The firm sees a modest breach of GE Capital fixed charge covenant, which could require further equity injections....MORE

The Baltic states: Where Hedge Funds Will Play (and die)

You think folks are pissed now? I wouldn't be surprised if hedgies have to add Force Protection to all the other risks of their biz.
As we saw in last Monday's "Creditanstalt Redux?: Failure to save East Europe will lead to worldwide meltdown", the place where international money flows are impacting the common volk of eastern Europe is currently in their mortgages. If your UBS mortgage is priced in Swiss francs and your wages are paid in a local currency, say the zloty, which has fallen 50% vs CHF, you have to come up with twice as much money to keep the house.
As hedge funds smell blood in the water they will short the piss out of eastern European currencies in an attempt to crush the smaller countries. Ah, good times, good times.
From the Financial Times Lex column:

Nowhere is the economic agony of “emerging” Europe worse than in Latvia, where output declined 10.5 per cent year on year in the fourth quarter. So, perhaps unsurprisingly, Latvia’s prime minister late on Friday became the first government head to resign since crisis struck the region. Latvia is also becoming a test case not just among its Baltic neighbours, Lithuania and Estonia, but for other emerging Europe states with fixed exchange rates.

Huge borrowing, financed mostly by Nordic banks, funded consumer and property booms in the Baltics, creating yawning current account deficits – Latvia’s was 14 per cent of gross domestic product in 2008. Difficulties in correcting those imbalances are compounded by the fact that currencies are pegged to the euro, which removes devaluation as an option. Instead, Latvia has been forced into a real economic adjustment, reducing wages and prices. After a €7.5bn bail-out led by the International Monetary Fund in December that retained the currency peg, Latvia adopted austerity measures including a 15 per cent cut in public sector wages.

Because most recent lending was in foreign currency, devaluation would cause a rush of loan defaults. But the economic outlook is even worse than when the IMF programme was agreed, while devaluations elsewhere in eastern Europe have only increased Latvia’s competitiveness problems. So the real economic adjustment will be agonising indeed. Capital Economics forecasts that the economy could shrink 15 per cent this year, and 5 per cent in 2010. As unemployment rises and deflation sets in, increasing the real value of debts, defaults will probably rise to levels similar to those after a devaluation, albeit more slowly.

Will Latvia hold the course? Historical precedents are inauspicious. Peru and Venezuela attempted similar adjustments two decades ago and ended up abandoning fixed exchange rates. If Latvia were to dump its currency peg, Lithuania, Estonia and Bulgaria’s currency boards would look vulnerable too. And foreign parents of banks in those countries face the choice of walking away from rising defaults or costly recapitalisations of their local operations....MORE

Here's today's Financial Times' Editor's Choice:

EDITOR’S CHOICE

Lack of funds hits IMF in east Europe - Feb-22

Consumer pain as zloty falls - Feb-22

Belarus tests EU’s unity of purpose - Feb-22

Opinion: The EU must help its new states - Feb-19

Banks inject $2bn into Kiev offshoots - Feb-19

Roma bear brunt of Hungary’s downturn - Feb-19

Britain faces summer of rage - police

From The Guardian:

Middle-class anger at economic crisis could erupt into violence on streets

Police are preparing for a "summer of rage" as victims of the economic downturn take to the streets to demonstrate against financial institutions, the Guardian has learned.

Britain's most senior police officer with responsibility for public order raised the spectre of a return of the riots of the 1980s, with people who have lost their jobs, homes or savings becoming "footsoldiers" in a wave of potentially violent mass protests.

Superintendent David Hartshorn, who heads the Metropolitan police's public order branch, told the Guardian that middle-class individuals who would never have considered joining demonstrations may now seek to vent their anger through protests this year.

He said that banks, particularly those that still pay large bonuses despite receiving billions in taxpayer money, had become "viable targets". So too had the headquarters of multinational companies and other financial institutions in the City which are being blamed for the financial crisis....MORE

HT: FT Alphaville who write-

...By our reckoning, though, the putative summer of rage still fares better in the gloom-stakes than the benchmark winter of discontent. The autumn of aggression has yet to make an appearance.

The continuing relevance of the bootlegger-and-Baptist model

We've had a few posts on Prof. Yandle, I link to one after the headline story from Knowledge Problem:

In 1983 Bruce Yandle wrote an influential article in Regulation, “Bootleggers and Baptists: The Education of a Regulatory Economist”. His model explains how two parties with seemingly incongruent values can come together to get a regulation passed that meets the objectives of both parties. In the bootlegger and Baptist case, both parties benefit from restrictions on Sunday alcohol sales, and will therefore lobby politicians in favor of such restrictions. The bootlegger-and-Baptist model even has its own Wikipedia page. It’s a very powerful model for understanding coalition formation and regulation in many situations.

Recently in Newsweek George Will wrote about Yandle’s model in a column striking a cautionary note about the current increase in government regulation and involvement in the economy. To illustrate the dynamics and the incentives, Will discusses two cases: sulfur dioxide emission regulation via technology mandates, and tobacco regulation....MORE

From June of '07's "Eco-Hypocrisy Corporate Style II":

As we look at corporate eco-hypocrisy I am going to refer to a few concepts from economics and the green movement, "Bootleggers and Baptists", rent-seeking and greenwashing.

Bootleggers and Baptists:

"Here is the essence of the theory: durable social regulation evolves when it is demanded by both of two distinctly different groups. “Baptists” point to the moral high ground and give vital and vocal endorsement of laudable public benefits promised by a desired regulation. Baptists flourish when their moral message forms a visible foundation for political action. “Bootleggers” are much less visible but no less vital. Bootleggers, who expect to profit from the very regulatory restrictions desired by Baptists, grease the political machinery with some of their expected proceeds.
They are simply in it for the money."

From Bootleggers and Baptists in Retrospect by Bruce Yandle (the guy who coined the term).

Rent Seeking:

"Until 1974, the term 'rent seeking' did not exist. This term was invented in 1974 by Anne Kreuger in an excellent paper published in the American Economic Review."
From "The Fundamentals of Rent Seeking" by Gordon Tullock in "The Locke Luminary" vol.1, no.2...MORE

Wind ETF vs Solar ETF vs Nasdaq (FAN; TAN)

Here's the First Trust Global Wind Energy ETF compared with the Claymore/MAC Global Solar Energy ETF and the Nasdaq Index, 10 day, via BigCharts: