It's Not Easy Being Evergreen

As long as Evergreen Solar (Nasdaq: ESLR  ) issues press releases trumpeting 110-kilowatt solar installations by customers like Boston Sand & Gravel, you know business isn't exactly booming. Alternately, as long as Evergreen keeps reporting rough quarters like this one, you know the solar shop's not shooting the lights out.

For the three months ended June 30, Evergreen shipped 23.2 megawatts of panels. To give you a sense of scale, SunPower (Nasdaq: SPWRA  ) (Nasdaq: SPWRB  ) is guiding for 400 megawatts of production this year. Evergreen remains a solar small fry.

Perhaps it was the 34% increase in shipment volumes over the prior quarter that led Evergreen to claim that momentum is building for the business. With gross margins remaining below 2%, however, it will take a lot more momentum before profits materialize. Just like last quarter, the stock slumped by double digits following the report. I should mention that shares of First Solar (Nasdaq: FSLR  ) did as well, albeit for rather different reasons.

Three months ago, I was apprehensive about Evergreen's forthcoming financing, and rightly so. When the company issued 42.55 million more shares in late May, they priced at $1.80, a nearly 20% discount to the closing price prior to the offering. Compare that to Trina Solar (NYSE: TSL  ) , which closed flat the day after its share offering last week. (Boy, was that one right on cue.) Evergreen now has more than 208 million shares outstanding. Time to increase that share authorization!

Was that most recent capital raise a case of throwing good money after bad? I guess we'll only know once Evergreen's Chinese plant, being built in partnership with Jiawei Solar, is up and running. (Construction has begun, and production is expected next spring.) Given the fact that Evergreen's market cap is lower than the amount of cash that the company has persuaded investors to sink into the company since its IPO, I'm not terribly optimistic.

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