Wednesday, July 28, 2010

First Solar Clouds the Truth, Oy Vey ...

FSLR's misleading statements on Dow Jones wires:
*DJ First Solar Raises FY10 View To EPS $7.00-EPS $7.40 > Prior midpoint was $7.05/share. FSLR decided to add the word "Raises" in the EPS blurb but did not use the word "Lower" in the Sales forecast: *DJ First Solar Sees FY10 Sales $2.5B-$2.6B>

Prior Sales guidance was $2.6B - $2.7BPOTC does not believe that's a fair way to represent the facts to the public firing squad. 

We expect Wall Street analysts to call FSLR out on what we view as a grammatical game of half-truths. POTC is upset with FSLR's PR team.

Wall Street analysts should catch this small yet important nugget. FSLR continues to string along expectations while having negative growth in EPS. EPS fell 13% from last year's Q2. We hope FSLR is downgraded in the morning by several sober analysts.

Most analysts on the conference call sounded downbeat and suspicious, only one actually said "congratulations", not a good omen for bulls.

POTC to FSLR: where's the growth in EPS? Why pay 20X for a company that is negative 13% from last year's Q2 and has lowered Sales twice within the last four months? We think the options will be fine, and we would add in the morning IF GDP comes in below 2.5%. POTC's target is < $120 by August expiration.

A more damning factoid: Q1 EPS was $2.04, Q2 $1.84 = $3.88/share, so if FSLR hits the low-end of their "raised" guidance ($7.00), they will have to deliver $1.56 in Q3 and Q4. Even so, that would be a large sequential drop in earnings from quarter to quarter: $2.04 to $1.84 to $1.56 to $1.56. We ask again, why pay 20X for FSLR?

And Sales are pegged at $2.5B - $2.6B for FY10. That means they will have to come with two consecutive quarters of $697M in Sales. There was Chicago coach in the mid 1980's named Mike Ditka, he liked using the phrase "who you crappin"?, and it applies here big time.

POTC respectfully asks FSLR execs, just as we called out RIMM at $65+ and it dropped to the $40's and GS from the $160's to the $130's, "Who You Crappin First Solar"?
Q1 Sales were $568M, Q2 $588M = $1,156B, so if we subtract that number from the midpoint guidance of $2.55B, we get $1,394B/2 Q's (Q3 and Q4). FSLR would have to post $697M in Q3 and Q4, after just posting $568 in Q1 and $588 in Q2. FSLR, you are definitely not fooling any POTC subscribers.

C'mon Wall Street, it is as simple as that, downgrade the stock based on twisted guidance. 
A nice night, morning, and afternoon to all. We truly appreciate your interest and loyalty.


Anonymous said...

I bot when shrs were at $138, great call. Also do see the point in misleading, excellent work fellas,,,,, vish in chicago_)_

Anonymous said...

fslr is known to do this news type of thing, hoping some 'sober' analyst down the stock, in at $4.55

Anonymous said...

stock is dropping after touching $137+, your views are warranted ..
Kj in Canada

Anonymous said...

Adam, I agree whole heartedly. The numbers just don't add up. FSLR will be called out on this. Good work again. your buddy rick")

Anonymous said...

The trade alert = pff ratio was fantastic and great. Wife nd I both thank you more then you know. Shah and my lovely Zafreen.

Anonymous said...

Cramer and Motley have nothing on you guys. WHATEVER you're doing, keep doing it. You are beginning to scare me! 5-5 this Q deserves extreme praises. thank you so much, and you are humble in the process, unf8ck5ng believable stuff you do. keith on jupiter isle loves potc!!