Don't panic -- it's not as bad as it looks.
In the three months ended June 30, Evergreen Solar
OK, why shouldn't this earnings release bother anyone particularly? Well, in my eyes, Evergreen is executing according to plan. 2008 is a capital-raising and spending story. Earnings are not a part of this chapter.
Last quarter I identified financing risk as my top concern, and Evergreen has since secured the convertible debt necessary to fund its capital expenditures. Whatever, say, the gross margin percentage happened to be in the quarter (34.7% for the curious), this sort of number takes a backseat to the $375 million raised.
Please don't misinterpret my dismissal of bottom-line results as giving Evergreen Solar a free pass. It's just not realistic to expect the company to crank out cash before meaningful scale is achieved. In fact, I would be highly skeptical of the company's future if it weren't for the differentiated nature of its proven technology and the stupendous supply deals it keeps scoring.
Just this week, Evergreen signed a massive $1.2 billion sales contract with IBC Solar. I've complained about every solar supplier known to man being identified as a "leading" company, but in this case such an appellation is apropos. IBC is identified in Evergreen's press release as "the largest PV distributor in the world."
Because of deals like these, Evergreen's planned capacity is booked quite solid. It's even sold out in the 2011-2013 time period. Perhaps you see why that financing was so crucial -- sales in 2012 may not materialize if you're strapped for cash today. If you don't build it, they won't come.
Here's the main thing that bothers me. Just like Ascent Solar Technologies