"Absolutely. But why clip at all when you have other alternatives?"
For me I just felt the extra 1000 dollars (30 micro inverters and around 35 dollars to upgrade) it cost to upgrade to the M250 was not worth the money for the tiny amount it would be clipped.
To go away from micro inverters would have been insane IMO.
Just read SEDG's paper where the tout their new "HD Wave" inverter.
What it states is how much of an antique they were previously selling (30 year old expensive, inefficient, non reliable tech....central inverters).
Why the heck would I want that in my garage just waiting to fail?
And it also begs the question if they were pushing that junk as hi tech why believe them now?
Compare that to ENPH new generations of micro inverters. ENPH does not bash their previous M250's or M215...they just state the new generation will cost less, be smaller and handle more watts.
Not that what I put on my roof last year is antiquated junk which is pretty much what SEDG is stating about their central inverters.
I don't know about that...but it's very clear ENPH's engineers think SEDG's new HD wave inverter is a scam.
While SEDG claims it is revolutionary ENPH claims it's old tech already discarded because of reliability issues.
Reliability issues was the reason ENPH tanked from 8 to 2 back in 2012, so it's a good reason to keep an eye on warranty obligations on the balance sheet.
Last quarter they increased a similar percentage to sales...meaning the new ones being sold aren't any better than those sold by SEDG years ago (the good news being they aren't any worse).
ENPH loses the stock price battle with SEDG, but on the reliability front they are the clear winner. Even though their actual product sales increased 10% last quarter (revenue was flat because of declining prices) warranty obligations declined 10% (meaning reliability has increased with newer generations).
As a side note today's move by SUNE to replace independent board members at TERP with SUNE employees signals the beginning of the end for SUNE...at least for equity shareholders.
So what's the difference between the business models of SUNE and SCTY?
Give Paul some credit.
Sure, he spend every dime ENPH brought in with their highest in the industry margins. But at least
he didn't bring in debt to start any projects.
If he did we'd all be worried about BK right now.
There is simply no way ENPH is going to stay with a 70M market cap and not get picked off by someone...cheap.
Most of the major players stock prices move their market cap that much every single day.
I'm not sure Nahi realizes the situation he's put not just the company in but himself.
I haven't found any golden parachutes set up yet. Bet they're coming.
"STC = Standard Test Conditions = The DC nameplate rating that you see on solar panels (i.e. your 260 watt panels). Namely, the amount they will produce when flashed with 1000W/sq meter at 25C."
So is 1000W/sq meter what you get at the equator at noon? I thought that was the standard for solar panels?
Nahi stated a 300 watt micro inverter could handle a high 300 watt panel and a M250 could handle a 300 watt panel.
I guess 85% is about the right number then for most parts of the planet.
"It is getting close to the point where I may go long. Although I don't like the product or the company it is starting to look like a decent short-term trade."
I bought TCPI recently for the same reason when it tanked because they delayed their accounting release.
I hate that company...borderline crazy CEO who the BOD just kicked out yet he still owns 30% of the company.
Still, at just over 80 cents and a major player in LED lightening...in both Walmart and Home Depot....I just had no choice but to buy some...nose closed.
No idea why it went up today...don't care (I sold).
Plenty will do the same thing with ENPH.
I have no issue with that.....I'm just going to hang out here until my thesis (ENPH took four or five years but came to dominate the micro inverter market..98% market share....and in four or five years they'll will do the same thing to the over all inverter market) proves right or wrong regardless of where the share price is.
At this point SEDG can't stop this from playing out...but once the share price gets this cheap it ends up with shareholders like you who will sell at a 30% profit tomorrow.
And that's why CEO's not on the ball can spell their own doom.
Check out KBIO the last week as an example. Stock dropped to a market cap of 4M (yet had about 10M in net assets along with the value of two early stage drugs that could be sold off) and that loser nut got his friends to pony up 3M and he borrowed 10M to buy 80% of the company.
End of the current CEO
I doubt that. TV manufacturers have been selling to competitors for years.
Also, who else is going to have a micro inverter the size of a cell phone that handle a nearly 400 watt panel?
One question. A the analysts day it was mentioned solar panels are rated in D.C. while micro inverters are rated in A.C.
I didn't really understand that.....but they stated that's why a M250 can handle a 300 watt panel without losing any production.
I know my M215's are fine matched with 260 watt panels.
So what the difference between DC and AC ratings?
No relationship...but crazy all the same.
ENPH has a net value of 50M on their balance sheet.
With a price approaching that it's pretty much assigning zero value to their 500 patents.
SolarBridge had zero assets yet sold for 105M because of their tech...that no one bought (ENPH owns
about 98% of the inverter market).
The thing is....the danger when your share price is just crushed AND was on huge volume you have a lot of new shareholders that will take a buyout offer not far from where the current price is.
It's called getting picked off.
Management hates this as they mostly lose their jobs, but it's the way capitalism works (the strong eat the weak).
I'm all for a buyout by SEDG, but only with stock (because it's going to go straight up after the buyout if concluded).
But if SCTY or SunRun or SolarWorld jumps in with a 200M cash offer how is ENPH going to fight that off?
SEDG would also be hit in that case....because now poor ENPH would have deep pockets and marketing muscle.
If you were one of those companies contemplating integrated panels why not just spend a few bucks and buy the whole company instead of paying them for years going forward?
Bottom line: The BOD isn't going to fire the CEO or CFO. It's going to be the company that buys them for chump change and they'll have no one to blame but themselves.
I'll tell you what the analysts are looking at.
Normally when you see a high tech company that just announced the sales will drop from 100M to around 65M in just one quarter but tell you not to worry, they have initiatives in place to turn everything around, you run for the nearest exit.
Because if current generation products aren't selling the odds are the next one isn't going to do any better (designed by the same guys that came up with first generation that no one likes).
So what's different here?
Lost in the revenue numbers are the fact their products (micro inverters) are not only selling, but selling very well.
Actual inverter sales increased 10% sequentially just last quarter.
So the market is there, you just have to figure out how to make a profit of it.
So what's the trend there?
In the past ENPH has been able to lower costs on average about 15% a year.
So now they're going to up that to 25%.
Makes sense to me, since they have over 200 engineers on the payroll and I'm sure a good portion of those were assigned to the battery design team....can now be reassigned.
So ENPH has a shot...their products are still cutting edge and in demand and it's a lot easier to fix cost then create market demand.
I was also thinking of why they never made a deal with SCTY in the past. I used to think it was SCTY that shunned them but then when I heard the production numbers a different story came to mind.
SCTY is huge. SEDG exploded because of them (over 30% of their business...which has been growing over 100% year over year for 5 years now). They would have wanted a discount and over 300K micro inverters per quarter...and growing.
If you were the CEO of ENPH and were selling every micro inverter you could produce why discount them and place your company at risk to a 30% customer (like SEDG did)?
Remember ENPH, if I heard right, can only produce about 1M per quarter. They are working to up that to around 1.4M...but that's not the case today.
I just dug up the info on Goldman Sachs US Emerging & SMID Cap Growth Conference.
It states ENPH cancelled.
Wonder why that was?
It was supposed to be at 2:30.
I'm going to guess the CFO phoned in early and Goldman Sachs notified the world tanking the stock for the day.
Don't think it's a big deal...they just yapped for 3 hours the other day.
It's got to be tough though to go before a group of sophisticated investors and pump a company that's lost 90% of it's market cap in the last 9 months.
It still goes on for a few more days...maybe they'll reschedule...but it does say "cancelled" on the web site.
Yea, I heard every word of it.
Then I went and read up on what SEDG is saying about it.
To them it's visionary. They are going to change the future of central inverters.
We'll find out soon enough if they're junk.
With ENPH those junky M190 caused an immediate jump in warranty obligation and complaints flooded the
internet back in 2012.
Last quarter SEDG's warranty obligations jumped 10% sequentially....but I don't think those new
wave inverters are selling yet.
It's funny how SEDG's states how superior the new ones are compared to the old ones....which they pretty list as 3 decade old junk..compare them to vacuum TV sets.
Well, a year ago they were touted as vastly superior to ENPH's micro inverters.
Now we learn state what ENPH has always stated....they're expensive antiques that will fail early and often.
So anything SEDG states you have to take with a grain of salt.
Nahi has been wrong on the markets but I've never know him to be wrong on his products.
As a side note Woody always accuses me of being in love with ENPH so I view it with blinders on.
Well, maybe. But I've owned stocks I've lost 90% on initially that turned into huge winners for me in the past.
I remember one that I bought that had dropped from 15 down to 2...and it continued all the way down to .10 cents before turning around and going back up above 10.
The reason they survived is they had great tech, no debt and enough cash to see through their rough patch.
I just see that with ENPH.
Just hope it doesn't go to 10 cents...but you never know.
Markets are nuts sometimes.
ENPH has spend more in the last two years on R&D than the current market cap...and rapidly approaching one year.
Name another high tech company that shares that distinction?
BTW, where the heck is the link to that conference the CFO was at today? Did he not show up?
While that is nice jump from Q3...they need to get over 990K for the quarter because that is what they have contracted for.
With Q1 being seasonally soft I think their hand was forced to get inventory under control now. That meant one time deals on micro inverters.
I still don't know if those prices will stay low once the inventory is gone.
I'm going to guess it depends on how much price reductions actually effected sales.
Nahi stated they were taking back market share but didn't elaborate and no one followed up since they probably didn't believe him in the first place after giving horrible guidance just two weeks previous.
I also suspect the reason Nahi never lowered margins previously is they were on a trajectory to sell every singe micro inverter they were making (950K last quarter and increasing 10% sequentially).
I just think SEDG finally hit the sweet spot of pricing (continued to lower prices) while ENPH stayed high forcing
The good news is this gives plenty of solid metrics to plug into a price analysis formula. Normally 90% of that is just guessing, but if you have real historical data (not just market guesses) to back it up you can plan with much more confidence (commit greater resources with confidence).
Since it looks like ENPH has to commit early in the year for the entire year that is a big deal (guessing wrong is what got them elevated inventory and A/R in the first place).
If you read about SEDG's new HD wave inverter it's a revolutionary new product. They claim it will change the market just as flat screen TV's did with their introduction back in 2000. This what Roth stated last month about it:
"Roth Capital affirms its Buy rating and $40 price target on SolarEdge Technologies (Nasdaq: SEDG) following recent investor meetings with CFO Romen Faier.
Analyst Philip Shen sees SolarEdge's Gen3 inverter giving the company the ability to reach string inverter parity within the next two years.
Shen offered the following commentary:
The Gen3 inverter lays the foundation for a revolutionary step in margin expansion. The new inverter is less than half the size and half the weight of the latest generation, which directly translates into a much lower cost structure. The residential version is set to be released toward the end of 2015 in the U.S., while a version addressing the commercial segment is expected to be introduced mid-2016. Benefits from the new inverter technology are expected to be "revolutionary" according to management. Even after baking in ASP erosion, the improvement in margins could be in the tens of percentages. That said, it will likely take at least three or four quarters to ramp-up to full production.:
Then compare that to what ENPH said about SEDG's new tech the other day....basically it was old tech repackaged that has seriously reliability issues.
So which is it?
Got me....I just think it doesn't matter what SEDG does it only matter what ENPH does. SEDG stated the inverter market will see price ASP price erosioin of 7-10% in 2016 while ENPH says they'll cut costs 50%.
Only thing for sure is SEDG"s market cap is approaching 10X ENPH's....meaning the markets think ENPH is blowing smoke and SEDG will be the ultimate winner in the price war.
And that opinion in now shared with every analyst.
I agree with everything you posted.
But if you look it's trading at it's 52 week low.
That means it's a target for tax loss selling.
And that's my guess as to why it's trading so low.
But it's still in it's range over the last couple years. There is no
technical damage being done from a trading standpoint.
The mystery to me is why the market has totally disregarded the HLSS purchase
when they initially loved it (12 to 17 run).
Even if you think it won't help dividends it provided another revenue stream.
It also wasn't done with debt...it was equity raised at a much higher price.
Just a thought, but maybe it wasn't the HLSS purchase that moved the share price but pumping
by firms to get a larger commission on the sale of the stock?
I go looking every year for stocks trading at or near 52 weeks lows. Most will get a 20% bounce or so the first couple weeks of Jan. It's more a small cap thing....I've never done it will large caps.
I think it's why the NASDAQ always seems to have a good Jan...even the dogs move up for this reason.
The last time ENPH hit sub 2 (2012) it started moving up by the last week of Nov. That is earlier then
most of those that I follow. Most stay low until the 2nd week of Dec before moving up.
Analysts price targets are based on P/E's and growth rates....for established companies.
It's a worthless metric for ENPH.....didn't work for Roth at 20 and won't work at 1.90
No one has a clue what ENPH will do for revenues in 2016 anymore than they did in 2015.
Roth gave them a P/E around 20 and thought they'd make a dollar a share in 2016....equals 20 dollar price target.
Now they think they'll lose nearly 30 cents in Q4 of 2015 and make a few pennies in
2016....give them the same P/E and you get 1.90.
My view is forget about next year and think of ENPH as a biotech stock with a drug up for FDA approval in a
couple years that could dominate a 7B market.
Small biotech stocks are very volatile. 1000% moves are common.
I've been trading in and out of AVXL the last month or so. It's gone from .15 cents to 15 dollars
in the last 12 months....dropped 80% in a couple weeks and now is moving up again.
Same product...but one small study and the entire perception of it changed (still at least two years away
from any real results so I'm don't courage anyone to buy it).
ENPH needs to show the market the potential of it's tech and clearly analysts day didn't work.
What they need is to show they can take market share back from SEDG.
Once that happens the perception will change.
If they wanted to impress the analysts all they had to say was...our new pricing is working and
we are taking back market share.
A low stock price has lots of negative ramifications so it's best if it doesn't trade at this level for long.
They don't need cash (major dilution to raise when your stock price is depressed) or loans (already have a 50M line of credit) so neither of those is a worry.
The worry is you get picked off cheap. SolarBridge sold for 105M and they were not 1/10 the company of ENPH.
Pretend SCTY decides micro inverters are the future. Why buy them one at a time when you buy the entire company for the same price as a couple years sales?
ENPH in all it's history as never had a steady share price. It's always on the move...one way or the other.
I don't expect that to change over the next year.
Could move to 10 cents if they run out of working capital because SEDG decides to sell at a loss for a couple year to put them out of business (150M on the balance sheet would hold SEDG over for at least a couple years of losses...they'd need negative margins to compete).
Or it could go to 50 (2B market cap) if they come to dominate the inverter and storage market.
Best case, worse case....which is usually the case for ENPH.
As a side note this reminds me of Pirates of the Caribbean when that pirate asked the girl if she believed in ghost stories and then followed it up with...."well you better because you're in one."
That was Nahi's reply yesterday. The analysts asked Nahi if he was thought there was going to be a price war between ENPH and SEDG. Nahi's reply is they were already in the middle of one.
BTW, making that analysts looked stupid worked out well for Nahi...he's the guy that downgraded them to 1.90 today.
I was thinking after last quarter ENPH had a deal in place with Flextronics that would play out for at least a year.
That deal to me is the reason they decided to cut prices 20% immediately.
Naturally I was right....I usually am on details but not so much on short term stock prices.
Yesterday it came out they can make 11K a day. Well, that's about 990K a quarter (90 X 11).
The previous quarter they sold 750K, then 859K and then 950K last quarter...which is why inventory was increasing.
With working capital already tied up in inventory and A/R they really had no choice but immediately cut prices to raise sales (they couldn't cut in-flow since they clearly have a long term deal in place). They put that decision off as long as they could (like all year) but in the end it was clear all their money was going to be tied up in inventory with the slowest quarter of the year coming up (Q1). That just wouldn't work.
So...the steady road to riches they had carved out hit a log in the road named SEDG.
As for why not spend more on cost cutting before a crisis hit....well, they did spend every dime they were making (and they made a lot of dimes) on R/D and growth. It was resources call...where best to direct it?
In the past ENPH was able to charge 100% more than SEDG for their products (according to SEDG"s web site they're half price of micro inverters).
A cost conscious world put an end to that....about 2 years too early for ENPH.
It looks on the surface last quarter was a push for both companies at a 50% premium for ENPH. Problem is ENPH needs better than a push to rid of the excess inventory and going into their weakest seasonal quarter (Q1).
The good news is in the end they'll still get to the same place (world domination:)....it'll just won't be on the road the analysts picked for them.
If ENPH had a large debt load or needed to raise equity I would say the current share price is justified....but neither of those apply here (thankfully).
If ENPH wanted to they could just plug it into their architecture...as you said, it's just a battery.
They already stated they were battery agnostic.
You can also add ENPH's batteries to anyone's system whereas if you add a powerWall you
still need to add another central inverter to the mix.
The price looks about the same to me. ENPH will retail for around 1200 for 1.2Kw.
"As another real-world point, SolarCity is quoting $7,140 to add the PowerWall to a solar installation (includes inverter, maintenance contract, installation, control system). This doesn’t sound unreasonable, and again $700/kWh for a small home-scale system is very cheap, though as mentioned above, multiple PowerWalls may be needed for many customers. SolarCity is doing well with this sort of deal – the price is for new solar installations only, where SolarCity would have to install an inverter, control system, and wiring anyway, so it’s cheap for them to kill two birds with one stone."
ENPH also already has a battery superior to the PowerWall as their cycles are about 50% more and then the inverter won't blow up every 7 years or so.
I guess you could make the case to give up the superior performing battery for the marketing muscle of Musk, but ENPH has never done that in their history so I wouldn't count on it.
One of points brought out by ENPH's engineers yesterday was that string/central inverters have been around for decades and that tech has been all but played out. It's kind of like gasoline engines, they can make minor improvements but they are not going to increase mileage or horsepower or reliability by 50% over a the course of a few years. A 2 or 3% yearly improvement is huge for them.
Micro inverters, on the other hand, are new tech and are in the baby stage. According to ENPH there are huge jumps in cost and size coming...and within 24 months.
Like being the size of a cell phone and costs dropping 50%.
I suspect Nahi's confidence in this is what led up to "analyst day" in the first place.
You ever see Apple or Samsung or any high tech company for that matter lay out a 24 month plan for their tech?
No one wants to give the competition a heads up on what they're working on...along with price points.
Yet ENPH did this.
The only reason I can think of is they are so confident there is nothing the competition can to do about it (old played out tech)
So are they over confident and blowing smoke?
When asked last quarter what SEDG would do if micro inverter costs dropped below Optimizers his reply was simply it had never been in the past so it will never be in the future.
Wonder if he still feels that way?
My thinking is he has to feel this way since other than cost there simply is no reason to use anything but a micro inverter.
Once that goes away so will their sales.
If SEDG had any brains they'd make a play for ENPH while it's down....especially after listening to ENPH's
plan released yesterday.
This guy thinks Sunrun will selling ENPH batteries.
BTW...the PowerWall is just a battery. ENPH is much more than that which is why it took two years and all that R&D month to develop.
"In October at the Solar Power International trade show, Enphase unveiled its AC Battery unit. It is beginning to roll out the AC Battery units in select markets this quarter. Sunrun will likely deploy the AC Battery as a part of its offering, in occasions where a battery will add value to the customer."
This is from PV magazine back in July.
As for Netmetering and batteries...netmetering in the form we know it is going away (ends in SoCal the end of this year). If ENPH was not blowing smoke the other day they will come to own the residential market (.10 cent a watt cost.....14 retail at 40 percent margins vs .32 for SEDG last quarter and .47 for ENPH last quarter) for not only the US but the world (7B market) That will give them invitation for their storage no one else will have....complementary products.
"From an analyst who covers the industry, asked a lot of questions, and knows what other companies are doing."
Roth is peeved his 20 dollar price target and strong buy rating back in July was destroyed by last Q's announcement by ENPH.
Every since inception if you followed the analysts advice here a losing trade was guaranteed.
They've always been behind the curve.
They all downgraded ENPH towards the end of 2012 (after it hit 2) then upgraded it 6 months later after it was above 10.
No one, not even Shah at D.B., saw the move ENPH made last Q coming (cutting margins 30% in one fell swoop).
But they'll be the same guys that upgrade ENPH when they start posting solid numbers again...just like they were last time.
Probably be a good time to sell if history is any indication.
Shah is 'the worst though....a week ago he came out with a price target of 26 on SUNE then lowered it to 16 last week.
The bottom line is they are just guessing....