LDK Roller Coaster Continues; Shares Up 8.6%
LDK Solar shares saw a bump Monday after weeks of flailing prices, closing up 8.6 percent at $41.15 per share.
Shares plummeted more than 50 percent from a peak of $76.75 per share on Sept. 27 to a low of $37.26 per share Oct. 8 amid allegations of inventory discrepancies (see LDK Says Inventory Discrepancy Allegations Have 'No Merit', New Details Surface as LDK's Stock Continues to Plunge, LDK Says Employee Made Allegations Before Termination).
Then, the China-based solar-wafer company raised its revenue guidance and announced new agreements to supply Solarfun, Chinalight and Canadian Solar with its wafers (see LDK Steps Up 3Q Guidance, LDK Shares Rise Despite Class-Action Threat). Those moves turned up LDK's share prices, which hit a high of $41.98 per share Oct. 22 and closed at $40.84 per share Oct. 23 before falling again.
Lazard Capital Markets on Oct. 23 initiated coverage of LDK with a "sell" rating, after Goldman Sachs also initiated coverage of the company with a "sell" rating on Oct. 19 and The Wall Street Journal reported that other LDK executives also had questions about the inventory.
On Internet message boards, writers claiming to be investors indicate the prices might be up because they expect LDK to release positive earnings news Thursday.
"I'm really on the fence about this inventory problem, but regardless, aren't we all expecting them to crush earnings?" wrote one commenter, as part of a Google Finance discussion.
Earlier this month, the company said it expects third-quarter revenue to be between $140 million and $150 million -- up from a previous guidance of between $115 million and $125 million (see LDK Steps Up 3Q Guidance).
But it's not clear whether the increase in LDK's share price is even due to the company itself. After all, many solar stocks were up Monday, including China Sunergy Co., Ascent Solar Technologies, Yingli Green Energy Holding Co. and Suntech Power Holdings Co.
At the same time, oil prices reached another record Monday, with crude oil futures closing at $93.53 per barrel.
The whole solar sector was up about 10 percent, said Adam Hinckley, alternative energy analyst for CIBC World Markets.
"I don't think there was anything specific; nothing new came out," he said, referring to the solar sector. "I was a little surprised myself."
New Choices At the Pump: Battery Recharge or Replacement
Former SAP software executive Shai Agassi wants to usher in a new way for drivers to fill up. On Monday, he unveiled Project Better Place, a company that will lease removable batteries for electric cars and build a bunch of battery-charging and replacement centers across the globe.
Agassi scored $200 million in a first round of funding from Israel Corp., Morgan Stanley, VantagePoint Venture Partners and individual private investors.
Taking its cue from the cell-phone industry, Project Better Place plans to offer "subscriptions" for electric-vehicle owners to tap into a nationwide network of battery recharging and exchange stations.
When a driver parks his or her car, the network can charge it with electricity from the grid. Or drivers can pull up to an exchange station to swap out their drained battery for a fully charged one.
Project Better Place says its business model can help overcome some of the major hurdles standing in the way of electric-car adoption.
Analysts say electric cars aren't ready for the masses because they can't drive as far on a single charge as gasoline cars can drive on a single tank. Getting stuck without a charge can mean waiting up to eight hours for the battery to fill up. And batteries are expensive, boosting the overall cost of a car.
Project Better Place isn't the first to come up with a business model to help overcome high battery costs. Among them is Norway's Think Global. The company plans to sell its two-seater electric car, but to lease the battery.
But Project Better Place is betting its approach will keep consumers on the road longer without the need to wait for an electric charge.
The company plans to test its approach early next year with high-use vehicles like taxis and delivery trucks. The plan also calls for the pilot program's expansion, which includes 100,000 cars on the system by late 2010.
But as ambitions drive high, reality might have a different road map. To support a mass adoption, Project Better Place will have to build a nationwide infrastructure where vehicles can either pick up a charge or a battery, and that will mean negotiating space and putting in stations at a high cost -- at a time when electric vehicles are still few and far between.
The company also will have to get car companies to engineer an easily removable car battery. Project Better Place said getting automakers on board via a partnership is part of the big plan so that it can offer customers several car models and subscription pricing packages.
Research Center to Help China Drive Green
In other alternative-vehicle news, General Motors said Monday it's pushing greener transportation in China by spending $250 million on a research center to develop alternative vehicle technology, including biofuels and hybrids.
The facility, to be located on GM's Shanghai campus, will carry out research projects with the Chinese government, academic institutions and industry partners. The center is expected to be completed in late 2008, with further expansion to come.
Research and development efforts will focus on exploring biofuel options, including cellulosic ethanol. Cellulosic ethanol is made from nonfood biomass like switchgrass, wood chips and corn cobs. Companies developing alternative fuel haven't yet been able to produce it on a mass scale, or at an affordable price.
The center also will research the design of materials that could reduce vehicles' mass, the advancement of alternative propulsion systems like flex-fuel and plug-in electric vehicles and increased energy efficiency of car-manufacturing technology.
In addition to the center, GM and Shanghai Automotive Industry Corp. also will jointly grant $5 million over the next five years to establish a China Automotive Energy Research Center at Beijing's Tsinghua University.
The university center will develop strategies for reducing China's dependence on petroleum-based fuel.
Schott and Wacker to Build Solar-Wafer Plant
Together, the two companies will spend about €50 million ($72 million), divided equally, on the joint venture.
The facility's production capacity is estimated to reach around 100 megawatts per year by the end of 2008.
The deal calls for Wacker to supply Schott with the silicon to produce wafers and turn them into solar cells.
Wafers also will be sold to other solar-cell manufacturers using a separate sales joint venture, of which Wacker owns 51 percent and Schott 49 percent.
Schott hopes the move will help it reach growth targets in the midst of a worldwide silicon shortage (see Silicon Starvation).