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GE Earnings Show Wind, Solar Weakness

General Electric's first-quarter earnings show declines in wind energy and solar energy that are consistent with current U.S. market weakness.



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General Electric's

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earnings showed alternative energy performance consistent with recent weaknesses in the U.S. wind and solar markets felt by pure-play alternative energy stocks.


GE's energy performance beat expectations of the Street, while wind and solar, specifically, were revenue decliners.

Revenue from GE's wind business fell 20% in the first quarter, the biggest revenue decliner among GE's energy business unit. On the GE earnings conference call, company management said wind orders were down 30% in the first quarter.

GE's solar thermal revenue fell by 14%. The U.S. thermal solar market tanked in 2009 as the entire construction industry remained weak, and the GE numbers show that it hasn't recovered yet.

The Solar Energy Industry Association released its 2009 annual report on Thursday, and the report showed that

thermal solar was the biggest loser in 2009 among solar energy markets.

The 2010 weakness in the wind market, as reported by GE's big revenue drop, is consistent with recent comments from other wind companies, as well as the performance of pure-play wind stocks.

Broadwind Energy

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, for example, had tried to downplay its recent poor earnings by saying that the U.S. wind market would hit a trough point in the first half of 2010 and shares like Broadwind would be poised for recovery.

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Recent trading in wind stocks has been mixed. Broadwind Energy shares are still depressed, but shares of

American Superconductor

(AMSC) - Get American Superconductor Corporation Report

, the U.S. semiconductor firm focused on sales into China's wind market, have rebounded in recent sessions.

American Superconductor shares were one of the market's biggest rally stocks on Thursday.

GE's head of renewable, Vic Abate, forecast the weak wind market numbers from the first quarter in recent written testimony before Congress. GE's Abate had told Congress that project economics in the wind market were not favoring projects being completed, and that the problems for the project developers were problems for the wind turbine makers like GE.

That said, GE made it clear in its earnings that the short-term weakness in alternative energy is not slowing down its investment. First quarter R&D was up 16% at GE.

What's more, at the end of March, GE announced a huge offshore wind project development effort for Europe of 340 million euros.

The fact that GE is investing so heavily in the European wind opportunity, at a time of acute weakness in the U.S. wind market, does not necessarily serve as a ringing endorsement of a quick turnaround in the U.S. wind market profile. At a larger level though, it's probably an indication of a larger shift from terrestrial wind projects to the offshore market.

A key question for GE, which has been one of the biggest players in terrestrial wind but is a new entrant to the offshore market, is if it can make the transition successfully, said analyst Nick Heyman of Sterne, Agee & Leach.

The analyst said the fact that wind orders fell by 30% in the first quarter makes it hard to predict exactly when the trough point in the U.S. terrestrial wind market, specifically, will be reached.

On thermal solar, the jury is still out on where the excitement meets the reality of a reasonable market growth profile. "Solar may have the most potential, but it's also the farthest out, and I wonder how much time GE has to spend taxiing in this business," said the Sterne, Agee analyst.

-- Reported by Eric Rosenbaum in New York.


>>GE Energy Strength: How to Play It

>>Solar Report Card: is Solar Making the Grade

>>Wind Winners: American Superconductor

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