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Cypress Plans SunPower IPO

SunPower makes silicon solar cells that transform sunlight into electricity. The unit was bought by Cypress in 2002.

Although young, the unit is growing fast. Its order book is full through next year and the company is working to expand its production capabilities. Earlier this week, SunPower announced a five-year, $300 million supply deal with Solon AG, a German-based photovoltaic module manufacturer.

SunPower sales are expected to be as much as $15.5 million in the second quarter, with a loss of $2 million. Included in the first-quarter loss and expected second-quarter loss are quarterly interest payments to Cypress of $1 million. The unit is expected to lose $500,000 in the third quarter, or a $500,000 profit when excluding the interest payment.

As for the departure of Hernandez from Cypress, Rodgers noted that Hernandez is from the Philippines, where SunPower has its manufacturing factory, and he comes from a manufacturing background, which will be instrumental to SunPower as it grows.

Rodgers said the decisions about SunPower and Hernandez were made Wednesday during a three-hour debate at Cypress' board meeting.

The timing for the IPO likely won't be until the fourth quarter. Rodgers said it will take about a quarter to get all of the paperwork together for the IPO and then he wants it to be making money when he takes the unit public. "We would rather have a profitable quarter in the bank and be forecasting a nicely profitable quarter when we take this thing out," he said.

It's unclear what the financial benefits to Cypress will be of SunPower's IPO. "That is the question and we don't pretend to have that figured out," Rodgers said.

However, he did posit that SunPower could have two classes of stock and that Cypress would control 80% of its board but would appoint only one or two current Cypress directors, one of them being Rodgers. "We want to consolidate them for growth but we do not want to dominate the company," he said.
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