First Solar tries to quell investors´ fears

Tempe-based First Solar Inc.´s founder told investors Thursday that despite last week´s firing of CEO Rob Gillette, the company is not facing any major scandal, government investigation, operational problem or other catastrophe.

Michael Ahearn, interim CEO as the company searches for a replacement for Gillette, said Gillette was not a good fit with the board of directors, which removed him after two years with the company.

"I know there´s been a lot of speculation about whether there was some type of fraud or legal action or government investigation or major operational problem behind the move, and I can tell you none of these things were part of the board´s deliberations," he said. "This was simply a question of fit."

Ahearn said he took responsibility for the hiring of Gillette.

Since Gillette´s sudden departure, Wall Street analysts who track the company´s stock have been speculating the company would soon announce layoffs, failed deals or other problems.

The stock opened at $58.11 the day Gillette´s ouster was announced and closed at $42.50 after more than 23 million shares were traded, compared with an average daily volume of about 3.6 million shares.

Ahearn´s words seemed to soothe those fears somewhat. The stock was trading up about 3 percent in after-hours trading immediately following his conference call with investors, although at a share price of about $49, it´s far below its 52-week high of $175.45.

First Solar also announced that it will slow down its global expansion of factories that make it one of the largest solar-panel makers in the world, postponing a new factory in Vietnam. But the Mesa factory now under construction still is scheduled to begin production in late 2012, which prompted praise from local solar proponents, including the Greater Phoenix Economic Council.

Ahearn said the company was on track, but leaders have made some mistakes in coping with the current market.

The first, he said, was being too comfortable making sales in places like Germany where subsidies are declining, rather than building new markets globally.

Second, he said, was having a "fixation" on maximizing quarterly earnings figures.

"Our decision-making needs to be guided by creation of long-term fundamental economic value rather than short-term financial metrics," he said.

"Now we need to make hard shifts," he said.

First Solar will make a renewed push to develop power plants using its solar panels in the U.S., India, the Middle East, Australia, South America and China, officials said.

"It´s easy to talk about these things," he said. "Executing them with a sense of urgency is more difficult. This is the time for First Solar to move to the future. We are uniquely positioned to do this now."

Besides declining subsidies in the company´s traditional markets, First Solar also has been stung by falling prices for its competitors´ solar panels.

Chief Financial Officer Mark Widmar said he is confident First Solar would continue to be the industry price leader and push its costs lower in 2012.

"We are basing our business plan on continued aggressive pricing by our competitors," Widmar said. "We are well-positioned to lead the future growth of the solar industry."

Analysts had few questions for Ahearn or Widmar about the transition or search for a new CEO.

Rich Wolf, an analyst with Capital World Investors, one of the largest institutional holders of First Solar stock, asked if the company was considering moves to boost the share value.

"For Mike (Ahearn), given that you´ve stepped back into the role, are you willing to make an open-market purchase or use cash from the balance sheet to buy stock at these levels to inspire confidence in holders?" he asked.

Ahearn has sold notable quantities of First Solar stock over the years, including about $150 million worth in March and August this year, and $142 million in February 2010.

Widmar said the company was assessing such a move.

Ahearn said he hadn´t decided.

"I think what we´re focused on right now is how do you build the fundamental value in the business, and we assume the share price will correlate to underlying economic value over time," Ahearn said.