Solar thin film maker Energy Conversion Devices (s ENER) held on for much longer than what some industry watchers had expected, but at the end, the Michigan company couldn’t stop its downward spiral. On Tuesday ECD announced it’s going bankrupt.
The public company filed for Chapter 11 and said it plans to sell its solar subsidiary called United Solar Ovonic, which has been the chief revenue generator for the company. Hints that Energy Conversion wouldn’t last long came last November, when the company said it would suspend manufacturing and furlough 400 workers. The company was making more solar panels than it could sell, though it had been struggling to grow and make money long before that.
The company generated $20 million in revenue in the quarter ending December 2011 and shipped only 11 megawatts during that quarter. “The Company continued to operate at unsustainable levels, resulting in substantial losses and a continued decline in cash balances,” Energy Conversion said in a statement Tuesday.
Questions have long been raised about Energy Conversion’s ability to survive. The company’s amorphous-silicon solar panels are far less effective than silicon solar panels, and that makes its products unattractive in markets where government subsidies are awarded for projects that can generate as much as electricity as possible. It therefore has to make them cheap enough to make up for lower efficiencies, something that First Solar (s FSLR) does with its cadmium-telluride solar panels. Even here Energy Conversion hasn’t delivered. For its 2011 fiscal year, which ended in June 2011, the company posted $305.4 million in losses on $232.5 million in revenues, compared with $457.2 million in losses on $254.4 million in revenues for fiscal 2010.
While many solar companies experienced big jumps in sales and profits in 2010, Energy Conversion had to implement cost-cutting plans and moved some of its manufacturing to Mexico. It took more cost-cutting measures, including layoffs, in 2011.
Energy Conversion’s thin films have graced the rooftops of companies such as General Motors (s GM), which apparently liked the technology enough to invest $7.5 million in another amorphous-silicon thin film company called Sunlogics last year.
Energy Conversion no doubt experienced greater setbacks when reports about low demand in Europe — the world’s largest solar market — and a pileup of unused solar panels in warehouses began to surface in early 2011. Those reports have come from the industry’s leader in low-cost manufacturing — cadmium-telluride solar panel maker First Solar (s FSLR) — and from makers of silicon solar panels, which dominate the market today.
Energy Conversion has been selling off its other lesser holdings over the past year. On Monday, it sold Ovonic Battery, a majority-owned subsidiary, to BASF for $58 million.
The Michigan company now joins a roster of solar manufacturers who have filed for bankruptcies, including U.S. companies Solyndra, Evergreen Solar and SpectraWatt and German firm Solon.