First Solar Inc.
) announced that it has acquired Solar Chile, a Santiago-based
solar development company. Solar Chile has a portfolio of
early-to-mid stage utility-scale photovoltaic power projects
totaling about 1.5 gigawatts or GW in northern Chile, including
the Atacama Desert region. Pursuant to the agreement, the
five-person Solar Chile team is joining First Solar.
With over 600 megawatts of PV power projects globally, First
Solar has a global development pipeline of projects under
contract to utilities totaling 3 GW, with 2 GW under
First Solar is the only stand-alone solar player in the S&P
500 Index. Based in Phoenix, Arizona, the company designs,
manufactures and sells solar electric power modules using a
proprietary thin film semiconductor technology. The company's
solar modules employ a thin layer of cadmium telluride
semiconductor material to convert sunlight into electricity.
Though First Solar's solar cells convert sunlight to electricity
less efficiently than traditional silicon PV modules, thin film
PV cells enjoy the advantage of producing electricity even in
lower light. This ability to produce electricity under a wide
range of light conditions makes these cells attractive for
utility companies that require stable large-scale, utility-sized
renewable energy production.
First Solar sells its products to project developers, system
integrators and operators of renewable energy projects, primarily
in Europe with a distinct focus on Germany. First Solar also
focuses on designing and deploying commercial solar projects for
Currently, the solar industry is experiencing a steep drop in
average selling prices. Also, the current macro scenario does not
bode well for the solar industry, which thrives mainly on
subsidies and grants. However, First Solar stands out among the
pack due to its stable liquidity position, which is in sharp
contrast to its cash-strapped peers. Moreover, in order to
counter the weak trend, the company is focusing more on
utility-scale electricity power projects. It is partially
compensating for its drop in margins through a major
restructuring of its operations.
In April 2012, First Solar announced major restructuring of its
operations in order to streamline its production levels with the
ongoing downward trend in demand and drive operating cost
efficiencies. The company initially envisioned the closing of its
German facility at Frankfurt. It also reduced its employee
headcount by 550 at its Malaysia plant at Kulim in May. However,
with solar fortunes improving in Europe the company extended the
life of the German facility. Overall, the company expects the
restructuring to reduce costs in the range of $30 million- $60
million in fiscal 2012 itself and annual savings of around $100
million-$120 million going forward.
First Solar presently retains a short-term Zacks Rank #3 (Hold)
rating. Over the longer term, we also maintain our long-term
Neutral recommendation on the stock. This is in line with other
solar peers like
Canadian Solar Inc.
CANADIAN SOLAR (CSIQ): Free Stock Analysis
FIRST SOLAR INC (FSLR): Free Stock Analysis
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