First Solar sells Assets at Loss

We have been consistently bearish on First Solar during the entire rally of the solar sector in the last one year because we think that the company’s technology is non-competitive with the mainstream crystalline silicon technology. It does not take a rocket scientist to compare the costs and efficiency of FSLR’s thin film Cd-Te panels and the c-Si solar panels from major Chinese companies such as Jinko Solar and others. The stock has been a huge under performer compared to the other solar stocks as the market has started realizing the undervaluation of other solar stocks.

I think that FSLR will have to take a huge write-down off its multiple manufacturing locations and equipment sometime in the future. The company’s value is mostly due to its system development and installation business and even that is threatened by the entry of solar companies into this segment.

Further proof of First Solar’s non-competitiveness comes from the fact that FSLR took a $60 million loss by selling its Arizona site where it wanted to develop a large new factory complex to make Cd-Te solar panels. The company has already closed a site in Germany as there is virtually no demand for its solar panels except from its in-house system installation business. While the other solar stocks have rallied heavily to become multibaggers, most of them are still cheaper than First Solar and should be bought in preference to FSLR despite its current profitability. Markets are forward looking and the other companies have better prospects despite their current losses and FSLR’s current profits. I would look to avoid or sell FSLR to look for better solar prospects.