Update SunPower (SPWRA)

That was a nice pop.

On Friday April 29 shares of Sun Power (SPWRA) jumped $5.57 or 34.6% on news that Total (TOT), the French oil company, would take a majority stake—up to 60%–in the California solar power company at a price of $23.25. That was 46% premium to the market price before the announcement.

The deal tells you quite a bit about both the oil and solar industries at the moment. Read more

I’d say the actual dimensions of the positive surprise—13 cents a share—were less important than the gain in credibility that came for SunPower (SPWRA) with making third quarter numbers after the market close on November 11.

The company faced credibility issues after second quarter earnings missed estimates of a penny a share loss by a very large five cents a share. And the stakes have gotten much higher recently: The stock of the solar cell producer had climbed 40% from its August low. It didn’t help that the company’s guidance set an extraordinarily large range for earnings of between eight and fifteen cents on revenue of $450 million to $490 million.

(And speaking of credibility, the day after the earnings release, the company announced plans to sell about $320 million in euro-denominated bonds. Debt offerings for solar companies have been extremely rare and SunPower’s ability to get one done would be a sign of investor comfort with the company and the industry. )

Investors know that the company doesn’t bear total responsibility for that high degree of uncertainty. Read more

From squeeze to glut for solar silicon makers

Soleil Securities analyst Paul Lemming has issued a note warning of a polysilicon glut that will hit the solar industry in 2010, according to a post by Eric Savitz on the Barron’s Tech Daily Trader blog.

Over the next three quarters, he calculates, the amount of polysilicon available to the solar cell makers will increase by about 70% because every major producer of polysilicon will ramp new capacity in the first half of 2010. That will send the spot price of polysilicon to the mid $30s per kilogram over the next six months from the current $50 to $55 range. (Read more of Savitz’s post here http://blogs.barrons.com/techtraderdaily/2009/12/09/solar-huge-poly-glut-coming-in-2010-soleil-analyst-says/ ) Spot polysilicon sold for a high of $450 per kilogram at its peak in 2008 and for $130 to $150 per kilogram in February 2009.

The effects of this will be devastating on polysilicon suppliers who will see the price for the silicon that they deliver to solar cell makers drop. Already in February polysilicon maker MEMC Electronic Materials (WFR) announced that had renegotiated its contract with solar cell maker Suntech Power (STP).

Who will take the punishment? Read more