Evergreen Solar Bowls No One Over (ESLRQ.PK)

Evergreen Solar Bowls No One Over

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Let's face it: First Solar's (Nasdaq: FSLR ) first-quarter report was a terribly tough act to follow.

Evergreen Solar (Nasdaq: ESLR ) did its best on Thursday to highlight the progress it's making at its Devens facility. Still, the fact that the company achieved a smaller "pro forma" operating loss compared with the fourth quarter wasn't wowing anyone. The shares are off more than 10%, which doesn't seem unreasonable given the challenges here. Before we get to the financing issue -- once again my primary concern -- let's look at the company's proposed China expansion.

Evergreen Solar told us last time around that, given the prohibitive cost of capital, its best path for expansion was likely a subcontracting solution, in which a third party would take the company's proprietary wafers and fabricate them into Evergreen-branded panels. The company has now unveiled just such an agreement, with China's Jiawei Solar.

Jiawei Solar has done work for Evergreen Solar, as well as SunPower (Nasdaq: SPWRA ) (Nasdaq: SPWRB ) , so this isn't a name out of left field. Evergreen Solar expects that it will be able to finance about two-thirds of the cost of a new facility with a preliminary capacity of 100 megawatts, leaving it with a $15 million to $20 million commitment to take care of. Looking forward to 2012, the company hopes to ramp to 500 megawatts and achieve a total manufacturing cost of $1 per watt, which, given its conversion efficiencies, would enable it to compete with the thin film offerings of First Solar, Energy Conversion Devices (Nasdaq: ENER ) , and whichever of the dozens of start-ups are all grown up by then.

That future sounds nice enough, but Evergreen Solar is running low on cash today. It has about $60 million available, with $57 million earmarked for other major capital commitments this year. So the company doesn't have much of a working capital cushion, let alone the money for this Chinese project. After last year's hair-raising capital raise (which was pulled off remarkably well), the company's going back to the capital markets once more.

I know that SunPower appeared to effortlessly raise more than $400 million this week (following a feeble first-quarter report, no less), but I just don't see Evergreen Solar receiving as warm a reception.

Best Odds in the Universe!
If you're interested in a 98.79% chance at beating the market... and a 70.84% chance at DOUBLING the market's return – Motley Fool Supernova could be just what you're looking for. And get this: We arrived at these odds from 10,000 random back-tested portfolios composed of Motley Fool Co-founder David Gardner's personal stock picks.

It's why David recently handpicked a small team of world-class portfolio managers. You see, he thinks these odds can get even better! And he'd like to prove it to you...

Simply enter your email address. And the answer to the question everybody is asking will be delivered to your inbox!

Fool contributor Toby Shute doesn't have a position in any company mentioned. Check out his Motley Fool CAPS profile or follow his articles using Twitter or RSS. The Motley Fool has a disclosure policy.

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment icon found on every comment.

Report this Comment On May 04, 2009, at 10:18 AM, TheSolarGuy wrote:

I agree with most of the article but a couple nuances. First, FSLR is the only good thin film company out there right now. True enough. Thin film is lower cost, fair. However, thin film is a lot less efficient and takes up three times the space as the better silicon providers like SunPower and Evergreen.
As such, I would expect FSLR to be a leader in the large scale PV systems, but SPWR and ESLR to be doing well in commerical and residential - both of which are going ot be heavily subsidized for the near future.
That said, ESLR is going to eventually get killed trying to manufacture in Taxachusetts, so if this China thing doesn't work out I'd dump them.