Tomahawk, WI 8/08/2013 (Basicsmedia) – First Solar, Inc (NASDAQ:FSLR) acquired GE’s solar technology. This acquisition brings into its fold a stakeholder who has solid connections in the utilities industry. Potentially, this can be the stepping-stone that FSLR needs to lead it into the realm of large-scale power plant manufacture.

In a statement, the companies said that FSLR has acquired General Electric’s cadmium telluride technology-portfolio in lieu of 1.75M shares. Based on Wednesday’s closing price, the 1.77% stake that GE has in FSLR is worth $81.8M. The solar company also reported a profit that did not meet analysts’ projections. This was due to the slump in revenue from its existing project pipeline. The shares dropped the most in 5 months.

When size is power

General Electric is the largest power equipment supplier in the world. Jim Hughes, the FSLR CEO, said that GE will now use its muscle to help FSLR market its solar panels to companies that are building solar farms on a large scale. He said that the near-term benefits of having access to GE’s sales force, will soon be evident, more so in hybrid installations.

GE has been actively promoting the concept of combination-power projects. Its wind turbines will complement the functioning of FSLR’s solar panels. Anne McEntee, who is the company’s head of renewable-energy, said that GE is a top-notch wind turbine manufacturer. It sells inverters that act as a link between solar panels and the grid. The plan is that the FSLR panels will be marketed under the GE brand name and customers will now be offered both generating-technologies. She said that the company is transitioning to what they do well: build utility-scale power systems.

The revenue dip

There was a dip in First Solar, Inc (NASDAQ:FSLR) sales in the Q2. The 46% dip took sales to $519.8M from $957.3M that they stood at in the same quarter in 2012. In a statement, the company said that this was attributed to diminishing revenue from power plant sales. The net income dropped to $33.3M or 37 cents/share from $111M or $1.27 in the previous year. With the exclusion of one-time items, per share profit stood 14 cents below the average analysts’ estimate of 53 cents/share.

In the current year, First Solar, Inc (NASDAQ:FSLR) now expects earnings per share of $3.75-$4.25 which is a notch lower than its May projections of $4.00-$4.50. Sales will be in the $3.6B-$3.8B range. The company’s shares plummeted by 13.43% at Wednesday’s close. This has been its steepest dip since 27 February.

What’s in the pipeline?

FSLR had a top-line miss and it will need to expand its utility-plants’ sales in boost-mode. There is no information about the company booking any additional business for the latter part of 2015 or 2016. This means that it will be under-using its production capacity. In my estimate, First Solar, Inc (NASDAQ:FSLR) will have to rustle up new contracts for a minimum of 500MW every quarter to keep the production wheels spinning at optimum levels. Currently, it is nowhere close to peak performance.

A global platform

GE’s support will help FSLR step-up its utility business. The former can prove to be a formidable force and First Solar now has to learn how to leverage that power to uphold its dominant position in the utility-scale solar space. It is a validation of their technology and their manufacturing process. What is even more important is that it will thrust First Solar, Inc (NASDAQ:FSLR) into the global landscape.

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