General Electric Company ( GE ) recently traded its thin-film solar panel technology to specialized semiconductor manufacturer First Solar, Inc. ( FSLR ) for a minority stake in the latter. The technological collaboration is likely to be a win-win deal for both the participating companies and benefit the overall solar panel manufacturing industry through cost reduction from operational synergies.FIRST SOLAR INC (FSLR): Free Stock Analysis ReportGENL ELECTRIC (GE): Free Stock Analysis ReportITT CORP (ITT): Free Stock Analysis ReportUTD TECHS CORP (UTX): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research
According to the terms of the agreement, First Solar will acquire indigenous technology from General Electric to make advanced thin-film solar panels to counter stiff competition from cheap alternatives available in the market. This is likely to improve the efficiency of the panels and reduce cost of the solar electricity produced, thereby regaining the cost-advantage from the competitors.
On the other hand, as a trade-off, General Electric will gain 1.75 million shares of First Solar, which equates to about 2% of the total outstanding shares of the latter. General Electric is likely to retain the shares for at least three years. In addition, the company will collaborate with First Solar R&D to develop newer technologies for further advancement to cadmium telluride solar technology.
Furthermore, First Solar will also continue to purchase inverters from GE Energy Management for global solar deployments for optimum electrical balance of manufacturing plants. The combination of complementary technologies from General Electric and First Solar is expected to improve solar grid integration with a competitive cost structure.
General Electric is one of the largest and the most diversified technology and financial services corporations in the world. With products and services ranging from aircraft engines, power generation, water processing and security technology to medical imaging, business and consumer financing, media content, and industrial products, the company serves over 100 million customers worldwide.
General Electric has a Zacks Rank #3 (Hold). Other companies in the industry that are worth mentioning include United Technologies Corp. ( UTX ) and ITT Corporation ( ITT ), both carrying a Zacks Rank #2 (Buy).