Investopedia: Still A Lot Of Questions At LDK Solar

It seems hard to argue that solar is not going to be an increasingly significant part of the world's energy production infrastructure. An IEA analyst's recent prediction that solar will produce the majority of the world's power by 2060 may be a little too far-reaching, but directionally that prediction could still be right. The question is, though, with so many players in the solar space, can LDK Solar (NYSE:LDK) emerge not just as a survivor, but as a leader in the world's transition to green energy? 

A Tough Second QuarterLDK Solar's second quarter results highlight that, for however bright the prospects of solar energy may be, the here and now is still beset by volatility. Sales fell about 12% when compared to last year, but almost 35% when compared to the prior quarter, as the company has seen a very adverse pricing environment in the wake of major cutbacks in European demand and a glut in rival supplies.

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Investopedia: Total Takes A Shine To SunPower

Admittedly, it does not take a lot to get conspiracy theorists fired up, but the deal announced Thursday night between Total SA (NYSE:TOT) and SunPower (Nasdaq: SPWRA) should have some of them foaming at the mouth. 


Many energy companies bought solar power companies in the 1970s and 1980s, only to find that the technology was far from a point where it was commercially viable (conspiracy theorists choose to believe that the energy companies deliberately "killed" solar power to maintain the hegemony of fossil fuel). Now the picture may be different. While solar still requires sizable subsidies to make economic sense in many places, the technology has gotten much better and solar assets may prove invaluable to energy companies looking to diversify and stay relevant for the long term. (For more, see Spotlight On Solar Stocks.)


The Terms of the Deal
While SunPower is characterizing the deal with Total as a "strategic partnership," the reality is that Total will be acquiring 60% of the company's shares and will effectively control the company's board. For this, the company is paying $23.25 per share (nearly $1.4 billion in total), a 45% premium to Thursday's close.

Total is also extending $1 billion in credit support to help accelerate the growth of the company (and this has been a chronically capital-hungry industry). 



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Can Suntech Break Through The Clouds

Although there are plenty of arguments and controversies about whether solar energy can stand on its own two feet, without government subsidies and inducements, there is no credible debate that the industry is real and growing. In addition to the sizable First Solar (Nasdaq:FSLR), there is a host of billion-dollar babies like Suntech Power (NYSE:STP), JA Solar (Nasdaq:JASO), Trina Solar (NYSE:TSL), and Yingli (NYSE:YGE) all vying for commercial superiority and Wall Street favor.

With this latest earnings report from Suntech, however, it may be time to wonder whether this significant player is making the best moves for the long-term interests of its shareholders.

A Partly Cloudy Third Quarter 
On one hand, Suntech clearly had a solid third quarter - revenue jumped 57% from last year, and 19% on a sequential basis. Although that number was reasonably well ahead of the average analyst estimate, it was nevertheless below the highest numbers in the range. Suntech's top line also highlights one of the primary challenges of this sector - shipments over 25% sequentially (and more than doubled from the year-ago level), but ASPs continue to head lower with some dispatch. That leaves all of these companies on a very challenging course - if they cannot continue to post strong shipment growth and keep production costs in check, they will find themselves on a gigantic hamster wheel. (For more, see Spotlight On The Solar Industry.)

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