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April 17, 2003
Is the Sun Setting on AstroPower?
    by William Baue

Once the darling of the green investors, AstroPower's share price has plummeted precipitously over the past year.

At about this time last year, the solar photovoltaic (PV) cell producer AstroPower (ticker: APWR) was riding high, its stock trading at around $27 per share on news of strong revenue and earnings growth.

All this changed drastically on August 1, 2002, when the company announced its second quarter revenue of $20.4 million, which was a mere one percent above its reported revenue for the first quarter of 2002. This figure was about $4.9 million below the consensus of analysts' estimates, according to a series of eight class action lawsuits.

"Analysts were stunned," one of the complaints states. The lawsuits were initiated after AstroPower postponed its announcement of fourth quarter and full year 2002 financial results last month.

Investors were also stunned. They slashed AstroPower's share price in half. It plummeted like Icarus from $14.89 on August 1 to $7.77 the next day, its lowest price in almost three years.

"We lost a ton," said David Schoenwald, portfolio manager of the New Alternatives Fund (NALFX). Launched in 1982, New Alternatives is the first socially responsible investment mutual fund that focuses specifically on environmental sustainability.

AstroPower, one of the few pure play stocks in solar power, is now trading at under $3 a share.

"The most recent decline is the consequence of AstroPower's not filing its financial statements for the period ending December 31, [2002,] never mind the period ending March 31, [2003]," Mr. Schoenwald told "I don't think anybody on the outside knows what's going on with respect to their financial status or their business."

AstroPower declined to offer any commentary for this article.

The lawsuits claim that AstroPower misrepresented its financial and business status between Feb 22, 2002, when it announced fourth quarter and full year 2001 financial results, and August 1, 2002, when it announced second quarter 2002 results. In light of these allegations and in the absence of more complete information, analysts are at a loss regarding how to assess the company.

"It's so hard to judge what's true or not," Mr. Schoenwald said. "They said [when they postponed announcing fourth quarter and full year 2002 results] that they had to wait until two government contracts were confirmed in some manner. It was pretty vague. They didn't say what contracts or with what government."

Government contracts and subsidies are key to the development of the solar energy sector.

"Government programs at the state and regional level, as well as the international level in countries such as in Germany and Japan, are fueling the growth of the solar PV industry," said Ron Pernick, co-founder and principal of Clean Edge, a San Francisco-based research and consulting firm for clean technologies. An example of these programs is a renewable portfolio standard, or when a government mandates that the utilities have to have a certain amount of renewable energy going over the utility grid.

"California is targeting 20 percent by 2017, New York has stated 25 percent by 2010," Mr. Pernick told "In both cases, we're talking about a doubling of renewable energy that's running on the grid."

In its Clean Energy Trends 2003 report, Clean Edge predicted that the solar PV sector will grow from a $3.5 billion global industry in 2002 to more than $27.5 billion by 2012. However, the industry is still experiencing growing pains.

"Not everything is in lock-step. At some moments you have too much supply, at other moments not enough," Mr. Pernick said. "We don't yet have a very in-sync supply-and-demand relationship happening. We're talking about a nascent industry that's still finding its way."

The infancy of all renewable energies is reflected in the volatility of their stock performances.

"The alternative energy sector in general has taken a humongous beating," Mr. Schoenwald said.

When it comes to AstroPower, though, New Alternatives is holding fast to its investment.

"There's too little information," Mr. Schoenwald said, making it imprudent for him to either sell his position in the company or buy more stock at a discount. "We can't logically do anything."


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