3 Ways to Save First Solar

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First Solar (Nasdaq: FSLR  ) used to be a highflier in the solar industry. It was a shining example of how a company could turn a relatively new technology into a profitable business.

Well the company's high aspirations were shot down this year as the price of polysilicon tumbled and traditional multicrystalline modules became more cost competitive. Suddenly, First Solar's lower-cost, lower-efficiency modules didn't look quite as attractive.

So it's time for First Solar to think about changing strategic direction to unlock the value that's left in the company. Here are three viable options.

Sell out
A few weeks ago, I brought up the possibility of a buyout of First Solar by General Electric (NYSE: GE  ) as a good option for both companies. They're pursuing similar thin-film technologies and GE would be able to leverage First Solar's manufacturing base and power plant pipeline with its bigger balance sheet.

The companies may also be able to put their collective research and development heads together to develop a higher-efficiency module than they make today. As module costs become a lower percentage of an overall installation's cost, efficiency becomes more important, which is why thin film will continue to fall behind in its current state.

Split up
First Solar really has two distinct businesses: module manufacturing and power plant development. At the stock's current price, some analysts say the manufacturing business is being valued at $0.

So one alternative is to spin off the power plant development business and allow it to purchase whatever modules are most feasible for any development. This would be a highly risky move, but could allow the company to focus more clearly.

Buy up competitors
What I really think First Solar should do is get aggressive and buy a couple of its competitors. The company had $679 million in cash on hand at the end of the last quarter, enough to buy Canadian Solar (Nasdaq: CSIQ  ) , ReneSola (NYSE: SOL  ) , and Suntech Power (NYSE: STP  ) with their current market caps.

These may not be the optimal candidates, and I would much prefer First Solar go for a single high-quality manufacturer like Trina Solar (NYSE: TSL  ) , but the point is First Solar has the balance sheet to grow beyond flat film. The company may also be able to buy a venture-backed firm with technology that First Solar could leverage.

At least in buying competitors First Solar wouldn't be taking these punches lying down. I would much rather see the company fight to expand while solar stocks are down.

What do you think First Solar should do? Leave your thoughts in our comments section below.

Fool contributor Travis Hoium owns shares of First Solar. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

The Motley Fool owns shares of First Solar. Motley Fool newsletter services have recommended buying shares of First Solar. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (4) | Recommend This Article (7)

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  • Report this Comment On December 22, 2011, at 12:59 PM, Brettze wrote:

    Travis,, it will be a colossal mistake to continue installing solar on rooftops except commercial buildings . Because solar modules will block beneficial sun warmth from going throught the roof into the attic space to warm up the insulation for the night. This is a colossally oversight in solar efficiency guidelines.. I urge not to put more solar modules on rooftops unless it is above garage .. But never on the rooftops!! You try standing in the shadow of an evergreen then walk out of it .. you will feel the big difference in temperature.. Same principle!! I cut down my beautiful row of tall Italian cypress trees that bloicked sunlight out of my house.. I felt so badly but it is worth it as my home benefits greatly from morning sunlight that help warm up my house... In the frenzy to generate electricity which is understandabe and jobs in tow, I still urge all of you not to allow installations of solar on your rooftop.. First Solar is wise to stop rooftop installations... and focus on utilty scale installations instead. If you still want to install on your rooftop, your heating bill will go up $20 or more a month becuase of the shadow on your roof.. I am not making it up.. it is common sense!!

  • Report this Comment On December 22, 2011, at 1:03 PM, Brettze wrote:

    I emailed to First Solar urging them to start exploring solar thermal energy not only to generate electricity but to heat homes like we already have for heating water in swimming pools.. This one is different that is to heat indoors with sunlight reflection all around houses and condos.. It will not be easy as most will be customized to fit each unit . Half of all utilty bills go to heat homes... We dont like setting thermostats too low. Solar heating will allow you to raise the indoor temp to the max !! as high as 120 degrees F if you want.. When you get back home from work, you will replace your clothes to summer clothes.. and sweating!! which is great or what? Sunlight is free and you can put up as many mirrors as you care to get your home so toasty that you wont need firewood except druing foul weather but you might not because fossil fuel prices will come down from falling demand !!

  • Report this Comment On December 22, 2011, at 1:06 PM, Brettze wrote:

    I am already using mirrors to heat my home.. I am enjoying it so tremendously!! It beats firewood!! no smoke no pollution no more unsequestered carbon at all! peace of mind !! i am thawing so well... I tore down my fireplace a couple years ago and I never regretted it... I am very happy wiht my solar mirrors!! It is not for heating water,, it is for heating indoor living quarters .. I have a glass sliding door which let in lots lots of sunlgiht and warmth!! Perfect warmth not too lame or too hot.. it is like walking in the desert sun!! Oooooooh , I love it... First Solar !@@@@@@@@@@@@

  • Report this Comment On December 22, 2011, at 1:13 PM, Brettze wrote:

    No rooftop solar please,, there is better solar ideas around the corner... mirrors!!! yeah mirrors.. First Solar has to be stupid not to think about mirrors! We can add sun tracking devices to gude mirrors on posts to bounce sunlight all around houses 360 degree around .. We can do more than to face to the Sun , we can also "bend" bounce sunlight back to houses from all around.. Computers and photovoltaics can power the motors necessary to guide and track mirrors to reflect sunlgiht... Solar engineers got to know better than to be stubbornly fiddling with sunlight to electricity conversion which is still too low in efficiency no matter who makes it... We still need photovoltaics , of course but solar energy must get way bigger than any of you would think.. We must grow solar energy way bigger than wind energy. Wind energy is big and growing which is great but solar energy is way bigger yet we sat on photovolatics while ignoring mirrors.. I dont mean brittle glass mirrors.. We can use different safer materials to put shiny coatings on and there is no danger of getting cut or bleeding to death from broken glass mirrors.. Why we still refuse to make them, reeks of conspiracies or protections for fossil fuel industries and producers and investors.. Investors still hold trillons of dollars in them and they want us to keep buying more and more . We will still use them but they want more and more and m ore pollution .. We already watched Inconvenient Truth and we still dont know what we must do ... to make more mirrors to increase solar energy. I mean safe mirrors that will not injure anybody or animals.. it is perfectly safe... It will not blind anyone because of computers ... Computers are smart enough not to blind people with mirrros.. Do I need to go on and on and on !! Get real!1 We cannot just produce more and more and more fossil fuels and we know better than that.. Get a life!! Travis!!

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