This is an excerpt from an article I originally published on Seeking Alpha. Click here to read the entire piece.)
In the middle of the trading day on October 25, First Solar (FSLR) abruptly announced the departure of CEO Rob Gillette:
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This terse statement lacking background information sent FSLR’s stock reeling into a one-day loss of 25%. The news of a CEO departure the week before earnings typically serves as a warning of bad results to come, and investors and traders sold quickly to get out of the way. The 23.6M in trading volume is 2.4 times as high as the next highest trading day volume…{snip}
{snip}…Unexpectedly, FSLR released earnings results before the market opened on October 26. While the conference call will still be next week, FSLR took this opportunity to deliver the earnings warning that I expected. {snip}
Ahearn also announced that “In preparation for 2012, the company is reducing capital expenditures and evaluating opportunities to reallocate overhead expenses to fund increased investments in market development, sales, and R&D.” I interpret this news to mean that FSLR plans to use the solar slowdown to press its technological and financial advantage over its competitors.
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I am expecting more sober news when FSLR releases guidance for FY12. The company typically waits until December or so to issue guidance on the following fiscal year.
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Be careful out there!
This is an excerpt from an article I originally published on Seeking Alpha. Click here to read the entire piece.)
Full disclosure: long FSLR shares, puts, and calls