The recent flurry of corporate earnings reports for the third quarter has, for the most part, failed to meet investor expectations. Tuesday’s report from DuPont was a perfect example.
The science and technology company said third-quarter sales came in at $7.4 billion, down 9 percent from the same period a year ago. While sales declined across the entire product range of DuPont — a company started in 1802 — one comment from the CEO shed light on a troubled sector.
“Weaker than expected demand in titanium dioxide and photovoltaic markets contributed to the decline from last year’s record third-quarter earnings," CEO Ellen Kullman said. "We are addressing these challenges now to position ourselves for improved performance.”
Other companies have found themselves in a similar position and have decided to take immediate action. Siemens AG, a German engineering company, announced that recently it is taking steps to move away from the solar industry and will seek a buyer for its systems, which use sun power to create steam for electricity-producing generators.
Siemens said government spending on these programs in Europe has been cut dramatically as part of the austerity programs being implemented to deal with budget problems in the region.
Of course, the troubles in the solar industry here in the United States are well-documented. For instance, last week SatCon Technology, a Boston-based solar power conversion company, announced it has filed for bankruptcy in an effort to reorganize its deep debt.
“Our goal is for SatCon to emerge from bankruptcy reorganization and continue to provide our customers with the quality products they need,” CEO Steve Rhoades said.
As recently as January 2011, shares of SatCon were trading at $41. But the stock went into a steep decline, even conducting a reverse stock split, and is now trading below 30 cents.
Like the ill-fated Solyndra, a company financed with $527 million in federal government funding, SatCon also received government funding. As recently as July, SatCon received a $2 million grant from the California Energy Commission for a project to “enable higher penetration of renewable power onto the electric grid through advanced solar energy harvest, storage and array control capabilities.”
SatCon’s partner in the project was A123, an electric car battery company that also filed for bankruptcy last week.
Investors have not completely given up on the solar industry. First Solar, a company that manufactures and constructs solar power systems, has held its value since going public in November 2006 with an IPO at $20 a share. It currently trades near $23.
Bottom line, the future success of solar will likely depend on government backing for projects. That includes both large, government-funded solar farms as well as tax credits for individuals and businesses that install solar systems. Without those incentives, it could continue to be a tough go for the industry.
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