While doing more research, I did notice that SPWR is the only one solar maker using 100% mono-Crystalline silicon to achieve highest energy conversion ratio. STP and Q-Cell use both Mono and Multi-crystalline to produce solar panel, hence their energy conversion ratio are lower than SPWR's.
Solely using mono-crystalline does come with cost. That is Mono-Crystalline silicon costs much higher than the average multi-crystalline.
It is important to observe COGS trend on SPWR's earning date.
It is interesting to note that SPWR in one of their previous CC stated: (correct me if I am wrong)
1) 75% of 2007 poly supply is already located. 2) 27% gross margin and 17% operating margin reached by the end of 2006.
This stands in large contrast to Jeffrey's view:
1) Most of 2007 supply contracts are short-term (less than one year). So the silicon price could be at spot market, which can be expected lot higher than current price. 2) Gross margin of 22% and opertating margin 11.5% by the end of 2006. 22.8% gross margin and 12.3% operating margin in 2007.
Jefferey's report essentially called SPWR management bluffing. All this seems bad news. But it is also interesting even with Jeffrey's strong reservation, their 2007 eps still comes out 55 cents. Although this is sizable lower than the numbers I have seen (68 cents), there still seems good resilience with Jefferey's bearish assumption. I suspect that part of Jeffrey's bearish view is already built into price.
My last post seems to dwarf the technology lead SPWR really had against the peers. It is still interesting that Q-Cell only achieving 16% efficiency ratio when using mono-crystalline. So the back-contact patent at SPWR does contribute higher energy efficiency. In other words, mono-crystalline alone is not able to lift efficiency ratio to 21%. (P.S. In Q-cell's annual report, they did indicate that multi-crystalline generally generates 2% less efficiency than mono-crystalline.)
COGS this quarter will be important, and so will the cash burn of the company. We are in 100% agreement.
My assumption is that SPWR will make only minor headway this quarter. Why? Because Si costs are rising and Si is a major component of SPWR's COGS.
Until SPWR can reduce the Si content in its PV's by 2.5x, it will not make money. When will SPWR reduce the Si content by that much? Hopefully, before SPWR runs out of cash, and dilution is required. Care to guess when the company will state it will happen? Will a clear date be given at the conference call?
You got my point - tne CEO of this company ought to be paying more attention to improving the ROI of the company than the ROI of his vineyard. Where is the Board of Directors on this issue? Is each member getting a case of the "Clos de la P.T. Barnum" wine as compensation for keeping his opinion quiet about this issue? I hope not.
By the way, CY had a 100+% run-up from 1999-2000. One year does not a stock pick make. Can the company do 40% for 2 consecutive years? How about 5 consectuive years? You get my point.
What business line am I in? I am not sure whether I should call myself a full-time investor. My business had been pretty stablized and wife can take care most of it. So that leaves my indulgence into investment. I do have pressure from her to maintain a reasonable return,, otherwise she might deprive me of this hobby. LOL! Starting about 2 years ago, I started subscrption on street research papers that does give me extra arm to research reading.
Although CY is not a home-runner yet, this board is the highest-quality board I observed. All participants, Simon, truth_be_told, hmcafe and many other names excuse me for not able listing while typing. I enjoy exchanging views here. Unlike some boards, we don't hype; we just exchanged views matter-of-fact. And the complexity within CY's structure is certainly an interesting challenge to most of us.