THIN FILM CHAMP FIRST SOLAR STILL SHINING

Originally posted May 6.
First Solar specializes in the cutting edge thin film solar materials market. The announcement of it’s Quarter 1 2008 earnings increase is a bright spot on a darkening investment landscape.

Mark Bachman, analyst, Pacific Crest Securities: "The company's having a hard time doing anything wrong...It's in a class by itself ... It has one of the best products led by one of the best management teams, and it is yet to have any operational hiccups that has dissuaded anyone from investing in the stock."

First Solar’s stock price only rose 2.6% on the big news. Why? Is it because investors see the company’s building of new factories in Malaysia as unwise at this time? Hardly. It is far from unwise. (See FIRST SOLAR: FIRST IN SUN, FIRST IN EARNINGS) Note: First Solar is building in Malaysia, NOT in the U.S. It is also focusing expansion plans on overseas targets in Spain, Germany, and Italy. Why? Because those countries have big incentives programs for solar energy development.

A country chooses its energy infrastructure by the incentives it provides. The U.S. gives the bulk of meaningful federal incentives to the fossil fuels and nuclear industries and toys with New Energy. Guess what kind of energy infrastructure the U.S. has?

Answer: Old.

First Solar was one of the first companies in the U.S. industry to admit solar energy’s vital investment tax credit (ITC) is unlikely (“less than 50% chance”) to be extended this year, leaving industry expansion in the U.S. in limbo.

Pacific Crest analyst Bachman: "A negative outcome on ITC would basically cause a paralysis in the installation business…"

First Solar plans to up its attention to the U.S. market in 2009, after changes in the presidency and in Congress.

If the U.S. Congress won't give the solar energy industry the incentives it needs, there is plenty of interest around the world. (click to enlarge)

First Solar Turns Up The Heat
Carl Gutierrez, April 30, 2008 (Forbes)

WHO
First Solar; Mark Bachman, analyst, Pacific Crest Securities

click to enlarge

WHAT
First Solar’s Quarter 1 2008 earnings “soared” to $46.6 million (57 cents/share), from $5.0 million (7 cents/share) in Quarter 1 2007. Earnings (on 194.3% sales increase): $196.9 million (Last year: $66.9 million)

WHEN
First Solar first 3 production lines were opened in Ohio in 2003. It opened 4 more lines in Germany in 2007. It expects to open 16 new lines in Malaysia in 2009.

One of First Solar's distinctions is its time in the field. (click to enlarge)

WHERE
- First Solar was founded in Ohio but is now based in Phoenix.
- It has a plant in Perrysburg, Ohio, a plant in Frankfurt-Oder, Germany, and is building 4 plants in Malaysia.

WHY
- First Solar’s thin film uses the very special Cadmium Telluride (CdTe) technology.
- First Solar plants: (1) Perrysburg, Ohio – 3 high volume lines, opened in 2003; (2) Frankfurt-Oder, Germany – 4 lines, opened in 2007; (3) Malaysia – 4 unfinished plants, 16 lines, expected to open in 2009.
- First Solar’s Quarter 1 2008 performance far outperformed analysts’ expectations. A Thomson Financial poll predicted earnings of $37.8 million (47 cents/share). It did almost 20% better. Predicted sales were $183.6 million. It did 7% better.

Cadmium Telluride (CdTe) leads the field largely thanks to First Solar. (click to enlarge)

QUOTES
- Mark Bachman, analyst, Pacific Crest Securities: "A stock with gains this big leave people wondering when to take their money off the table…"
- Pacific Crest analyst Bachman, on First Solar’s strength in the absence of the ITC: "It's tough to say it can't be affected…but once investors figure the lack of exposure to the U.S. market, it will quickly outperform everyone else in the group."