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Four Key Quotes from First Solar about the Solar Industry 2 comments

by: SA Editor Judy Weil November 04, 2008 | about: FSLR    
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Eric Savitz reports that Barclay’s doesn't think much of the solar industry's prospects. First Solar (FSLR), however, reported Q308 earnings last week to a pretty sunny outlook.

From First Solar's Q308 conference call:

There are no plans to cut programs in any of [our worldwide] markets… Material, near-term subsidy reductions across these markets are unlikely. There are several reasons for this; first any significant reduction in these programs could result in job loss and reduced economic activity, at a time when local economies cannot afford it and in fact seek stimulus; second, the cost of the solar programs is generally modest in relation to other programs and largely factored into existing electricity rates; and third, those countries that felt the need to moderate growth, mainly Germany and Spain, have already modified their programs, while the remaining countries are still in the ramp stage.

Expanding into the U.S. residential market:

First Solar and Solar City have entered into a five-year 100 megawatt module purchase and supply agreement... Solar City is very good at things that we don't want to do, which is aggregate demand and do the hand-to-hand work with the end user in the tranches. So, it's an alignment [through which] we can expand market and move away from subsidy dependence. 

Products selling well, good management: 

As the industry cost leader, we are already priced well below competing products and continue to experience demand for our module in current price levels… By matching capacity to demand rather than building production capacity on speculation, we have avoided taking excessive risk with expansion capital.

A robust company and market, but the U.S. loses out because they won’t repatriate their money for tax reasons:

If you look at 2008 tax rate it essentially takes into account the full benefit of the tax holiday… If we were to decide to repatriate cash back into the United States... we will be taxed at a US tax rate driving the effective rate up.

 
 

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