This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Solar Stock Swingers: Energy Conversion

Energy Conversion Devices increased revenue , narrowed its quarterly loss, and decreased its cash burn rate -- however, the company is still in a cash-burn situation. "It's disappointing that they are still at a loss, but it's getting better, and it was a good quarter in general, but the biggest question mark is the same: finding demand for their niche product," said Burt Chao, analyst at energy market specialist Simmons & Company. "You can't flip a switch overnight, or over one quarter, and go from being a non-profitable company to a profitable one, but at least Energy Conversion is conservative and has not overpromised," the energy analyst added.

Wedbush Securities made much the same kind of concession in its view of Energy Conversion Devices in its post-earnings wrap. "We believe ENER is making progress but will likely continue to struggle as oversupply conditions resume in 2011 and demand for niche products like flexible BIPV remains below expectations.... We do believe the company is making progress on its turnaround efforts given its 200 megawatt project pipeline and increase in factory utilization."

Nevertheless, Wedbush took down its price target on Energy Conversion Devices shares from $7 to $6.

The U.S. solar company also noted that its focus on the 200 MW project pipeline will result in "lumpiness" to earnings, as it will be difficult to provide a timeline for when the projects hit -- and, even more importantly, the project business has the ability to soak up working capital and cash, something that a company already in a cash burn situation needs to watch closely. "We need to manage cash and we have to be clever in how we approach the project business," Energy Conversion Devices management said on the conference call.

A Citibank analyst, Tim Arcuri, noted to Energy Conversion Devices management that by his estimate, even with a decreased cash burn rate, the solar company will be at a level of less than $100 million in cash within six to nine months.

In response, the solar company's management said it has no plans to tap the capital markets again, and that it was looking at financing deals that would aggregate a number of smaller solar projects of the type in which it specializes into financing pools that could be attractive to investors. Still, the company was not ready to provide any details. "The trick for us is financing," Energy Conversion Devices management said, but the trick was still up its sleeve as far as how much it was willing to share with analysts.

Energy Conversion Devices, which has been running at 25% of capacity, will be at 50% of capacity in its next quarterly report. Even getting to 100% capacity will not alone result in the cost reductions that the solar company needs to become more competitive, Energy Conversion Devices management conceded on the conference call.
3 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
STP $0.53 0.00%
JASO $8.40 -1.87%
SOL $1.26 -3.82%
AAPL $95.18 1.64%
FB $117.43 -0.96%


Chart of I:DJI
DOW 17,750.91 -140.25 -0.78%
S&P 500 2,063.37 -18.06 -0.87%
NASDAQ 4,763.2240 -54.37 -1.13%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs