SAN FRANCISCO -- Government subsidies for solar panels are starting to erode -- and

SunPower

(SPWR) - Get Report

believes that may be just the kick in the pants it needs to get going.

In Japan, where the government tends to lead other countries innurturing alternative-energy technologies, many subsidies have already ended.And as demand for solar panels grows among builders and homeowners, government funds in other countries are likely to dry up so market forces cantake root.

When that happens, there will be a few key factors determining whosesolar panels get bought: cost, appearance and efficiency.SunPower's panels have no edge on up-front costs. But their sleek blackpanels look better than the blight you see on many roofs, and the energyefficiency of those panels will help cut energy costs in the long run.

Such was the message that SunPower CFO Emmanuel Hernandez took toinvestors on Tuesday at ThinkEquity's G4 conference in San Francisco. "Ourcompetitors often note that we have a manufacturing process that costsmore, that we need more capital expenses to deliver the kinds ofefficiency we have," Hernandez said.

But, he said, SunPower's panels deliver more watts at a cheaper ratethan those of its rivals. "It's big enough to offset the higher costs upfront," he said. "You need fewer of them up on the roof, fewer frames,less labor, everything."

SunPower has recently expanded from solar cells into solar panels inanticipation of a government-incentive free market, in which a company'sbrand is more of an asset. According to

SolarBuzz

, solar system revenueis expected to expand to $19 billion in 2010 from $7 billion in 2004.

"We believe in the long term it will be important for there to bebrand recognition in the market," Hernandez said. "Today, everybody cansell the product, so it's important that we get recognized as solarproduct of choice."

Hernandez said SunPower will post revenue this quarter of between $60million and $62 million, up from $55 million in the previous quarter and$22 million in the year-ago quarter. The company has been also beenreeling in expenses, posting operating and net profit for the past twoquarters.

And margins are expected to continue to improve: Analysts areforecasting a 15% operating margin in the fourth quarter, up from 12% inthe second quarter. Hernandez said the company's longer-term target isfor a 20% margin.

Holding Company Holds On

Say what you will about

InternetCapital Group

(IGCE)

, but you must give the company points for persistence.

ICG, a company that was a high-flying Internet stock in 2000 as aholding company for money-losing start-ups -- yes, that was back whenpeople said "B2B" with a straight face -- has stuck to its guns and, sixyears later, is a holding company for money-losing on-demand startups.

In December 1999, IGC's stock soared as high as $4,900 on asplit-adjusted basis, but for much of the past year, it has treaded waterbetween $8 and $10. It closed trading Tuesday at $9.14, thanksin part to an overall updraft in

Nasdaq

stocks.

"On-demand" is an emerging market that could become a disruptiveforce or, like B2B, devolve into an empty buzzword. It usually refers tothe kind of browser-based, pay-as-you-go business-software modelpioneered -- and dominated -- by

Salesforce.com

(CRM) - Get Report

.

ICG Chief Executive Walter Buckley pointed to a recentreport from research firm IDC that said on-demand software spending isforecast to grow at an annual rate of 21% to $10.9 billion by 2009, from$5.5 billion last year. "The on-demand model will account for this yearabout one third of all software sales, and that's up significantly overthe past five years," he said at the G4 conference.

Buckley said the market value of its nine core companies isabout 1.7 times their revenue over the past 12 months, but he hopestheir value will increase to three or four times revenue over the next fewyears. At the same time, he anticipates their collective revenue to growby 25% to 30% during that period.

In the second quarter alone, revenue of eight of the nine corecompanies (of which IGC owns an average of 45%) grew by 38%, while EBITDAgrew 55%, Buckley said. However, IGC still showed an operating loss of$7.1 million, equal to nearly half of its $16 million in revenue.

The holding company has had some modest successes in spinning offsome of its properties. It sold online-marketing company

Linkshare

to Japan's

Rakuten

for $425 million in 2005. Itlisted another company,

GoIndustry

, on the London StockExchange's AIM market through a reverse merger with a company called

Grasshopper Investments

.

And another business-software company,

Blackboard

(BBBB)

, which was listed on the Nasdaq in 2004, is up 49% over the past two years -- despite a ticker that sounds like a very scary credit rating.

ICG's stubbornness just may pay off if it continues to claw itsway back toward profitability.