No, it’s not Solyndra that’s in trouble this time.
The board of America’s largest solar panel company, First Solar, shocked investors and industry analysts alike by announcing on Tuesday that it had fired CEO Robert Gillette and asked former CEO and company founder Mike Ahearn to replace him in an interim spot until a new permanent leader could be found. Shares of First Solar, which had already declined 63 percent throughout the past year, nosedived, falling over 25 percent in the hours following the announcement.
First Solar’s board made the abrupt decision public via a release on the investor section of the Freemont, Arizona-based company’s website:
Board of Directors of First Solar, Inc. (NASDAQ: FSLR) today asked its Chairman and company founder, Mike Ahearn, to serve as interim Chief Executive Officer. Ahearn has accepted. Effective immediately, Rob Gillette is no longer serving as Chief Executive Officer, and the Board of Directors thanks him for his service to the company. The Board of Directors has formed a search committee and is initiating a search for a permanent Chief Executive Officer.
First Solar told TPM it had no further comment beyond the release, at least until its third quarter earnings call on Thursday, November 3, which cannot be good.
But financial analysts and industry experts did have much to say, after they picked their jaws off the floor.
“Today’s abrupt announcement is disconcerting, we have never quite seen a CEO departure announced in this manner in our universe,” wrote Credit Suisse, Greentech Media reported.
“This is not a good sign,” said Gordon Johnson, head of alternative energy research and managing director of Axiom Capital Management Inc., said about Gillette’s departure, MarketWatch reported. “It’s more difficult for First Solar to compete now since the price of traditional crystalline solar panels have come down so much,” he said.
Indeed, consensus seemed to be that First Solar’s prior market advantage – the fact that it produced ultra-thin solar panels using cadmium telluride, instead of conventional polysilicon – has been eroded by the global rapid drop in silicon solar panel prices, between 30 and 40 percent this year alone, notes Renewable Energy World.
That harsh reality is even sadder considering the fact that in July, First Solar reported it had set the world-record in solar panel efficiency with its cadmium-telluride cells.
Gillette, formerly CEO of Phoenix, Arizona-based Honeywell Aerospace, had served as First Solar CEO for just over two years, since September 2009, when he took over from Mike Ahearn, who stepped down in April 2009 to focus on lobbying, but did so at a time when the company reported better-than-expected quarterly revenue of $418.2 million.
Gillette’s firing wasn’t totally out of the realm of possibility though, as his tenure was marked by a 65 percent loss in market value for the company, Reuters reported. The news outlet adds that analysts were increasingly sounding the alarm on the formerly successful company’s longterm business prospects in the face of an oversupply of solar panels globally. J.P. Morgan analyst Christopher Blanset on Monday also pointed the finger at “quasi-state sponsored Chinese competitors,” for First Solar’s woes.
The news of Gillette’s canning is just the latest in a string of executives leaving the company, though two earlier departures appeared more voluntary. In April, First Solar announced that president of operations Bruce Sohn, was leaving the company. Gillette said then that it was “a natural time for him [Sohn] to pursue opportunities outside the company.” That didn’t stop shares from plunging 5 percent.
In August, another First Solar executive, Jens Meyerhoff, head of utility systems business and former chief financial officer, stepped down, citing company growth as the reason for his departure.
In 2010, First Solar received a a 30% investment tax credit for solar installations from the U.S. government, among multiple other subsidies from governments abroad, Forbes reported.
But before any conservative bloggers begin alluding to Solyndra, the White House-backed solar company that declared bankruptcy in August, it’s important to mention the Department of Energy recently rejected a $1.98 billion loan guarantee for First Solar’s $2 billion Topaz project in California, due in part to what one analyst deemed the “Solyndra fallout,” the Wall Street Journal reported.
Still, First Solar did manage to sell two other solar projects in California to private companies, including General Electric, for over $2 billion, thanks to government-backed loan guarantees it received on September 30, the final day of the Department of Energy’s loan programs. TPM has reached out to the Energy Department for further information and will update when we receive a response.
Also, the company went public in 2006, some of the company’s early investors were members of the uber-wealthy Walton family, that is, relatives of Sam Walton, the creator of WalMart. At one point, they owned 53 percent of the company, but sold many of their shares in a secondary offering and then later on multiple occasions in 2010 after the stock rallied.
Still, there’s little denying the current forecast for First Solar is a gloomy one, but we’ll know more when the third quarter results are publicized on November 3.
