First Solar Scores a Sweet Deal

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Even for the tumultuous solar realm, OptiSolar has experienced some blistering highs and some withering lows. Now, with a combination of a huge development pipeline and inadequate cash and/or credit to move forward on its own, the company has sold out to First Solar (Nasdaq: FSLR  ) for $400 million in stock.

Last August, the thin-film startup landed a gigantic power-plant deal from PG&E (NYSE: PCG  ) right alongside SunPower (Nasdaq: SPWRA  ) (Nasdaq: SPWRB  ) . Just a few months later, the company had shaved half of its workforce, in a move that made Suntech Power's (NYSE: STP  ) 10% haircut look like a casual trim.

First Solar has long been a cash flow-positive, low-cost leader. Now that the solar freeze has taken hold, the company is in a pretty rare position to be able to nurture other struggling solar players. First it was supporting customers by extending payment terms and looking at partially financing large solar projects. Now First Solar is bringing OptiSolar's very successful development team under its wing.

This is a big win for both sides, but perhaps moreso for First Solar. This acquisition instantly adds nearly two gigawatts of utility-scale solar projects to the development pipeline. Since both companies use thin-film technology, the shift from OptiSolar panels to First Solar panels shouldn't pose any problems.

In the quarterly call, First Solar's biggest cautionary remark regarded the possibility of producing too many modules in the face of inadequate demand. This acquisition should put those concerns to bed and help investors sleep at night. SunPower and Google (Nasdaq: GOOG  ) -backed eSolar, two of the other rising stars in the solar power plant realm, are the ones that might lose some sleep over this deal.

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Fool contributor Toby Shute doesn't have a position in any company mentioned. The Motley Fool has a disclosure policy.

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  • Report this Comment On March 09, 2009, at 3:14 PM, XMFSmashy wrote:

    I want to clarify that OptiSolar sold its development pipeline to First Solar, and will continue as a standalone thin-film manufacturing concern. Sorry for any confusion!


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