Change is hard. If it was easy, there wouldn't be best-selling books about moving your cheese.
Mr. Market hates change and uncertainty more than most. Today, his jittery nerves were tickled by semiconductor wafer producer MEMC Electronic Materials
The stock is trading at seven-year lows after falling more than 16% today. Earnings fell short of analyst expectations despite turning $0.04 per share of last year's red ink into $0.06 of profits per share. Sales increased a measly 2.4% over last quarter but 59% over the year-ago period. $448 million in revenue includes $31 million of electric power sales from the recently acquired SunEdison operation.
And therein lies the rub. MEMC has been making solar wafers for years. That's still a healthy business that complements traditional semiconductor materials sales to the likes of Samsung and to the third-party chip foundries of the world. Now that MEMC has taken the drastic decision to produce solar power too, the company has become a very rare beast that controls solar panel installations from the raw materials and all the way up to collecting service revenue. In fact, I can't think of a single competitor that fits this description (but set me straight in the comments box below if you know of any).
So rather than just selling materials to panel producers like Suntech Power Holdings
SunEdison is still a mere pup of an operation, scooped up for a song in its formative years. Using its homegrown solar panels, MEMC plans to more than double SunEdison's installed power capacity before the end of the year. Walgreen
So sales were weak and earnings disappointed this time. Big deal. MEMC is building itself into a unique solar power play for the future, and there will be occasional divots on the way. That disturbs Mr. Market much more than it bothers me. I'm heading over to CAPS to lock in this awesome starting price while it lasts. Come join me if you'd like, or cast the opposite vote if you think the market was right about MEMC today. I double-dog dare you.