Breaking News: Solyndra Closes Its Doors, Sends Home 900+ Employees

A sad tale of VCs, DOE and Silicon Valley innovation

Eric Wesoff August 31, 2011

Eric Wesoff

Editor-at-Large
Greentech Media

Eric Wesoff is Editor-at-Large at Greentech Media. Prior to joining GTM, Eric Wesoff founded Sage Marketing Partners in 2000 to provide sales and marketing-consulting services to venture-capital firms and their portfolio companies in the alternative energy and telecommunications sectors. Mr. Wesoff has become a well-known, respected authority and speaker in these fields.

His expertise covers solar power, fuel cells, biofuels and advanced batteries. His strengths are in market research and analysis, business development and due diligence for investors. He frequently consults for energy startups and Silicon Valley's premier venture capitalists.

We're hearing from Soyndra's now-ex-employees with tales of passion for their company and their jobs and no regrets.

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This just in from Solyndra....

Solyndra Suspends Operations to Evaluate Reorganization Options

FREMONT, Calif., August 31, 2011 – Solyndra LLC, the American manufacturer of innovative cylindrical solar systems for commercial rooftops today announced that global economic and solar industry market conditions have forced the Company to suspend its manufacturing operations. Solyndra intends to file a petition for relief under Chapter 11 of the U.S. Bankruptcy Code while it evaluates options, including a sale of the business and licensing of its advanced CIGS technology and manufacturing expertise. As a result of the suspension of operations approximately 1,100 full-time and temporary employees are being laid off effective immediately.

Despite strong growth in the first half of 2011 and traction in North America with a number of orders for very large commercial rooftops, Solyndra could not achieve full-scale operations rapidly enough to compete in the near term with the resources of larger foreign manufacturers. This competitive challenge was exacerbated by a global oversupply of solar panels and a severe compression of prices that in part resulted from uncertainty in governmental incentive programs in Europe and the decline in credit markets that finance solar systems.

“We are incredibly proud of our employees, and we would like to thank our investors, channel partners, customers and suppliers, for the years of support that allowed us to bring our innovative technology to market. Distributed rooftop solar power makes sense, and our customers clearly recognize the advantages of Solyndra systems,” said Solyndra’s president and CEO, Brian Harrison. “Regulatory and policy uncertainties in recent months created significant near-term excess supply and price erosion. Raising incremental capital in this environment was not possible. This was an unexpected outcome and is most unfortunate.”

Customers who have implemented Solyndra solutions can be assured that their systems will generate economical, clean, solar power for decades.

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Interesting times for Solyndra, as usual. A huge black eye for the DOE loan guarantee program, the DOE, and to Obama. What company will ever want a visit from Obama?

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We'll keep you updated over the course of the day as we hear more.

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We've covered the CIGS thin film solar firm recently and tried to take a positive viewpoint. Perhaps the firm, which has been the brunt of tons of criticism, some justified, some not, could be the absolute Silicon Valley solar come back story of the decade.

The beleaguered firm could emerge from a withdrawn IPO and withering attacks from all sides to become a viable supplier of an innovative solar technology that reflects some of the best qualities of Silicon Valley's engineers, entrepreneurs, and investors.

Or the firm could continue to lose money and become embroiled in a variety of scandals surrounding its loan guarantees.

Here's the newest piece of information to cross our desks. This comes to us courtesy of Bruce Krasting's blog but the info is on the Federal Financing Bank website. It shows that Solyndra received lower interest rates than any other DOE Section 1705 recipient for this $2.3 million loan.

But that pattern of lower interest seems to apply for this $43 million in loans as well...

I've contacted Solyndra for a comment.

Why should Solyndra get better loan rates than Beacon Power or Arizona Solar One? I'm not ready to jump on the Argonaut Equity / Kaiser / Obama conspiracy wagon -- but some transparency on this matter from the DOE would serve to clear up these murky numbers. I've contacted the DOE for comment, as well.

On slightly less dramatic issues -- we've heard rumors from multiple sources that Solyndra is close to booking more rooftop business from two major retail chains. And we've also heard that Solyndra is attempting to raise more venture capital. I imagine those are interesting meetings. Solyndra did raise $10.6 million more in equity funding a few months ago.

Lastly, Solyndra did announce that founding CEO Chris Gronet has been further distanced from the company as per this press release.