Blog Post

Nanosolar CEO: No More Easy Money for Solar Companies Without Cash Flow

The CEO of thin-film startup Nanosolar, Martin Roscheisen, is an outspoken guy — so of course he has something to say about how the credit crunch will effect the solar industry. He says in a blog post this morning that solar companies with capital inefficient production methods will now have a harder time getting investors to fund large investments like building factories. Roscheisen specifically names Applied Materials (s amat) as an example of a company with capital inefficient manufacturing, saying, “[T]hese companies are eternal black holes in terms of cash flow; whatever cash orbits their vicinity disappears in them and is never to be seen again.”

Wow. Roscheisen claims that Applied Material’s high-vacuum thin-film cell manufacturing equipment has a revenue to capex ratio that “is barely 75 cents on the dollar in a realistic pricing environment.” We’re not sure about that assertion and we are waiting to hear from Applied Materials. Roscheisen also says that Nanosolar recently had its first profitable month, partly due “to frugal cost management.”

One thing that Nanosolar’s high-profile CEO is correct about is that the credit crunch should be making all solar companies stretch their dollars as far as possible. He notes that over the past few years a solar boom created a climate that:

“seemed as if capital is free and the only thing that mattered is rapid production capacity expansion at no matter what capital expenditure…this has now begun to change — and rapidly so.”

6 Responses to “Nanosolar CEO: No More Easy Money for Solar Companies Without Cash Flow”

  1. Yeah, it’s no longer going to be easy money. Hedge funds are gone, buyout shops are too leveraged on existing portfolios, banks are toast…just about all that’s left is “sovereign wealth” funds: a.k.a. “oil money.”