Two More Green Startups Join IPO Queue

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Following recent news that two solar companies were braving listings in public markets, two more bold candidates recently threw their hats into the ring.

One of them is STR Holdings, short for Specialized Technology Research. The Enfield, Conn.,-based company has two lines of revenue: It makes encapsulants to secure and protect semiconductor circuits in solar modules, and it runs a consumer-products quality assurance business. The solar encapsulant business made up 45 percent of revenue last year, and the quality-assurance arm made up 55 percent.

STR had combined revenue of $61.3 million in the first quarter of 2008, nearly double the $31.3 million that it made in the year-ago quarter. Net income didn’t grow twice as fast. It delivered a net profit of $3.8 million in the March 2008 quarter compared with $2.8 million a year earlier.

It’s not very clear how a solar-component maker and a consumer-goods quality assurance service tie together, but what is a little clearer is that the solar business has much higher gross margins (about 50 percent versus 25 percent for quality assurance). So although STR has been in the quality assurance business since 1973, the solar side of things is shoring up overall profit.

But at least STR is profitable, which is more than can be said for the other newcomer: First Wind Holdings, a Newton, Mass., wind-power company. Wind power is a capital-intensive business at first, but has longer-term potential to deliver profits as the alternative-energy grows more common.

Even so, the losses at First Wind seem daunting. The company has racked up an aggregate $138 million in losses since 2003. And although it didn’t start making revenue until 2005, it’s only made $37 million in revenue through March 31, 2008. First Wind has borrowed a lot of money, which it’s hoping to pay some off with this offering.

Last week saw GT Solar go public and fare badly. GT waded into a turbulent market facing terrible economic news. Its underwriters overvalued the IPO and some are accusing it of merely wanting to cash out insiders rather than benefiting new investors.

Still, the financials of GT Solar looked stronger than either of these new candidates. If GT is getting slapped around, how do you think the market will tolerate weaker offerings?

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