Of course, the fact that
CNBC didn't bother to ask Maxim's Chew to elaborate on his First Solar report didn't stop
CNBC from adding to the inane chatter about First Solar on Thursday afternoon, highlighting a quote from Chew's report after the close
As for GE acquiring First Solar, here are a few point and counter-points to consider:
Chew made all of the logical points in favor of a First Solar deal in his report, though he didn't intend it to imply a deal is likely:
- Prospects more likely at $5 billion market cap today than $15+ billion in 2010
- GE's entry into First Solar's cadmium telluride solar module market production merges interests
- Low cost of capital for a GE offers incomparable strategic advantage to FSLR's project business
- FSLR likely more willing seller after turbulent year, including the ousting of its CEO, and the return of former CEO Michael Ahearn as interim CEO who has no "skin in the game," having already unloaded his entire insider stake in First Solar to the tune of a personal fortune in the range of $500 million
Now here's the counter-point argument:
- Why would a company known to be arrogant (maybe that's overstating it, a little) accept a deal based on its current $45 share price when just months ago it was $180 and why would GE buy at $50 knowing that Total
(TOT) bought SunPower
(SPWRA) at $23.35 and shortly thereafter open market shares of SunPower were trading at $6 as the solar sector fundamentals worsened, especially since the market upheaval is not yet finished? In fact, some solar analysts believe when all is said and done and the shakeout in solar finished, First Solar shares
could be worth much lessthan they are now.
- I've a few times heard the quip, "GE likes to buy companies out of bankruptcy" so why not wait even longer, even if it is interested?
- With GE investing in Primestar, why not just take First Solar down in competition beginning in 2014 as opposed to buying now when the market is a mess? It seems that GE's timed introduction for 2014 allows it by happy coincidence to avoid the massacre of today's market.
- The low cost of capital makes sense, as well as access to GE's global footprint where it is one of the dominant nat gas turbine sellers, and that's the SPWRA story with Total, isn't it? But is FSLR as bad off as SPWRA and really has to make a deal and see its once momo shares of $180 sold at $50?
Eric Rosenbaum. >To follow the writer on Twitter, go to Eric Rosenbaum. Follow TheStreet on Twitter and become a fan on Facebook. To submit a news tip, send an email to: firstname.lastname@example.org.
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