| ReneSola CEO Xianshou Li
On April 28, 2011, ReneSola held its first-quarter conference call. In answering a question from Lazard Capital Markets analyst Sanjay Shrestha about pricing expectations for solar panels in the fourth quarter 2011, CEO Li said that price per watt could fall as low as $1.10 or even $1.
The comment was quickly passed over until later in the call, when then-Auriga Securities analyst Mark Bachman followed ReneSola down into the pricing rabbit hole. Here's the exchange between Bachman and ReneSola's CEO and CFO, reprinted in its entirety (and it could have saved you a whole lot of money in solar stocks if you got out after reading this conference call transcript):
I need some clarification here. In response to Sanjay's question about ASPs in Q4 of 2011, you mentioned that pricing was going to reach $1.10 per watt, and again that's $1.10. Did you get confused here with euro and dollar pricing, and should have been quoting euros there instead of dollars?
Julia Xu, ReneSola CFO:
No, I did not.
So you truly believe that you're going to see module pricing at $1.10 by the end of this year.
(interpreted) We have always been conservative in terms of pricing. But as we have also mentioned, the Module business now is not our core business, but we have to be conservative in building our assumptions. The downstream capacities are pretty massive, so it is not unlikely module prices can fall very substantially from the current levels.
So Julia, you may have a very competitive cost structure here across your whole business, but when you look at the industry, do you really believe the pricing will go this low and the industry is going to survive, based upon this outlook that you give? Your competitors can't even produce at $1.10 per watt right now. Why would you suggest that the module price then would reach $1.10 by Q4?
I'll answer your second question first. We are at full capacity so we cannot raise any more shipments. So that's to your second question. But I will refer the first question to Mr. Li.
It is not a rosy picture Mark. The reason why we are saying it is not because people cannot survive, or whether or not they can make a profit off the current cost structure. It is because there is really massive capacity that's out there. So when you have a fairly severe over-capacity situation, it is very difficult to pinpoint pricing just based on a cost structure.
Julia, I guess our -- go ahead, I'll let Dr. Li finish.
Well, just because -- I am trying to answer your question in a sense of cost structure. Even wafer price is around $0.70. The cell and the module processing costs are going to be well below $0.50, so even at $1.20, companies are still going to make a slight profit, and this is not that bad of an outcome against a very large over-capacity situation.
I would just say I would argue with you there. You can quote all the capacity numbers you want, but it's not cost effective capacity out there. I would say that I find these comments here quite reckless, and I just hope you didn't kill the solar market.
The Renesola CEO wasn't reckless. He didn't kill the solar market, either; he just warned all of us it would be killed. And he was right.
Xianshou Li, whether you intended to or not, you were the Cassandra of solar's future in 2011. Keep up the "reckless" management. You told it the way it was, or rather, the way it was about to become.
Oh, and by the way, the latest industry data on the average price per watt of a solar panel as of this week: 95 cents.
And here's the Co-CEO of the year in solar, who didn't just say something, but did something, something big, before the worst arrived.