arm847

First Solar Q3 2007 Earnings Call Transcript

I appreciate the evaluation presented- good base for further discussion.
I've run some calculations for the above, and concur up to the point of calculating a P/E - I believe you are using the net profit per quarter to produce your PE of 13-15, rather than the full year expectation which would be 4X that, or PE of 3-4 for the 2012 period.

As to speculating of a price going to $2K per Kilo, based on "Proven Te limitations", I think this is exceptional speculation. Copper refining produced Te as a byproduct when Te was at $5, and copper production is up with China coming on line. Other sources of Te from combustion products of coal, mining refinery outputs should maintain a market pricing of Te more in line with 1/4 of your estimate, so a decline in $/Wp based on Te pricing might be acknowledged at $.05, but hard pressed to go beyond that.

The CdTe technology, while practiced in the lab for years, needs the demands of mass production to force methods to reduce the layer thickness from the current estimate of 3 microns to 1 micron- what happens then to demand? reduced to 1/3 of the current projection, and with it the price structure.

I'm betting on market forces and metal refiners to jump on this niche market and generate adequate supply for the coming decade, at least. Price escalation does that, but it takes time to build the capacity. By that time, other sources of PV will likely take their place alongside CdTe in competing for business, and the Te capacity issue will be reduced demand, so First Solar goes on with adeqate supply, and to my way of thinking, about another 5-6X of price appreciation at a PE of 20 and annual net of 4.5 B, rounding out a 90B market cap. The world won't run out of only one thing- the demand for energy, and solar is moving up to the right place.

One thing I do agree with- buying Te is a smart move.