Tuesday, October 11, 2011

SunPower: Twice As Bad As Solyndra, Twice As Bad For Obama

Neil McCabe writes:

How did a failing California solar company, buffeted by short sellers and shareholder lawsuits, receive a $1.2 billion federal loan guarantee for a photovoltaic electricity ranch project—three weeks after it announced it was building new manufacturing plant in Mexicali, Mexico, to build the panels for the project.

The company, SunPower (SPWR-NASDAQ), now carries $820 million in debt, an amount $20 million greater than its market capitalization. If SunPower was a bank, the feds would shut it down. Instead, it received a lifeline twice the size of the money sent down the Solyndra drain.

Two men with insight into the process are SunPower rooter Rep. George R. Miller III, (D.-Calif.), the senior Democrat on the House Education and Workforce Committee and the co-chairman of the Democratic Steering and Policy Committee, and his SunPower lobbyist son, George Miller IV...

SunPower’s political action committee (PAC) was not shy about participating in the political process either.

According to the SunPower PAC filings for its activities in the 2010 midterm election campaign cycle, it donated more than $36,000. Of the $15,650 donated to House and Senate candidates, $14,650 went to Democrats, with these top recipients: $4,000 to Sen. Harry Reid (D.-Nev.), $3,000 to Rep. Gabrielle Gifford (D.-Ariz.) and $2,900 Sen. Barbara Boxer (D.-Calif.)...

According the firm's website LHOM specializes in providing advice to clients on larger macro political issues trends. “Utilizing our broad experience in California and Washington, D.C., we can furnish 'big picture' analysis of developing political and policy trends which may affect client interests and goals.”

What does Miller the Younger bring? Read here: “George Miller brings a lifetime of friendships, relationships, and contacts together with over 15 years of front-line advocacy experience. He’s an attorney with expertise that ranges from insurance and banking to transportation, taxation and gaming law,” according to the website. “Unlike most advocates, George is at ease working both the corridors of Sacramento power or the halls of Congress.”...

In his Sept. 26 column for SeekingAlpha.com, Stoyan Elitzen lists SunPower as the ninth-most-shorted solar stock in either the New York Stock Exchange or NASDAQ markets. Short sellers are betting that a stock price will go down, as opposed to those who buy long, who expect a stock price to up.

According the Elitzen, the size of SunPower's short position is equal to 15 days of its average daily volume of 725,000 shares per day. By any measure, such pessimism is a banshee screaming in the night for a company's stock price that has already lost 94% of value from its 2007 apex...

In addition to all its other challenges, the company and its officers are defendants in a federal shareholder lawsuit, whose plaintiffs include, the Austin (Texas) Police Retirement System, the Arkansas Teachers Retirement System and a number of institutional investors for an alleged scheme to deceive the investing public by making false statements contrary to nonpublic information known to the insiders.

The allegations cover the period between April 17, 2008, to Nov. 16, 2009, the day the company announced that it had discovered unsubstantiated accounting entries to its operations in the Philippines, which led to the significant restating of the company's financials.

There are a number of lawsuits filed in California courts relating to the same period alleging gross mismanagement, breach of fiduciary responsibility, unjust enrichment and abuse of control.


  1. I suspected DOE/Obama went ahead with the controversial late Sept. solar energy loan guarantees under the political calculation that these firms would go under without, and would do so before November 2012, causing a bigger issue than keeping them going. They may have miscalculated with stories cropping up like this one. The whole DOE green loan and grant program looks like the biggest payoff fund in history, courtesy of the American Taxpayer.

  2. Can't anybody read a balance sheet? Debt and market cap are not directly relevant to each other. Anything the author says about the company's condition or how the market's reacting to it is colored by this glaring error.

  3. @Anonymous 1:58PM

    Oh yeah, big error. Are you serious? I you going to invest in a company like that with no earnings just debt?

    You should run on Obama's ticket and replace Biden.

  4. Talk about an unbalanced sheet or ticket either way.

  5. All this money will come back to the Dumobrat's re-election fund.

  6. Banacek: clearly, you don't know how to read a glance sheet. SPWR's assets on the last filing: $3.3 billion. How does $800 million of debt look against that? Not so bad. Not great, but in danger of imminent demise? Hardly.

    Compare to another company, with market cap of about $43 billion, and debt of about $100 billion. According to the author and you, this company would be shut down were it a bank. Never mind the $160B+ of assets. It's Ford.

    Seriously, learn something First next time.

  7. Follow the money, follow the money.