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Steer Clear of Akeena Solar

by: Phillip Lyon July 23, 2008 | about stocks: AKNS    

Phillip Lyon

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I’ve looked into the financials of several solar companies and Akeena Solar is by far the worst solar company I’ve checked out based on fundamentals. Akeena Solar is a good example of what not to look for in a stock.

For the last five quarters the net loss of Akeena Solar has grown. In Q1 of 2007 Akeena Solar reported a net loss 930,000. In Q1 of 2008 Akeena’s net loss ballooned to 4.6 million.

To make matters worse, the company is diluting shares like crazy. In Q1 of 2007 the company reported 16.5 million diluted shares. In Q1 of 2008 the company reported 27.8 million shares. That’s a 68% increase in shares. If the company is ever able to report a consistent profit it will not matter because future earnings are currently being offset by extreme dilution.

To add insult to injury insiders of Akeena Solar have been dumping shares.

Increasing losses and heavy dilution are a bad combination. If you are looking to invest in a solar company I would steer clear of Akeena Solar.

Disclaimer: I do not have a position in AKNS.

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This article has 17 comments:

  •  
    Jul 23 06:37 AM
    Would be interested to know what the Author thinks of SATC and ZOLT???

    Thank You
    Reply
  •  
    Jul 23 11:58 AM
    I bought AKNS 6 months ago and am down significantly. I am not happy with the mountain of losses but they do have an upside. They install solar systems in the US which is an untapped market. I believe there will be legislation in the US in the next year that will offer significant credits to the industry and this will be a boon to AKNS. The other thing that AKNS has going for it is that there are a lot of manufacturers that may look for vertical integration and AKNS is cheap.

    Someone asked me recently why I didn't average cost them down and I said no need to throw good money after bad. Bottom line at this point for me it isn't a total loss but I don't feel that confident either.

    Reply
  •  
    Jul 23 12:20 PM
    I fully agree. By the way, I dumped SPWR months ago for similar reasons. When insiders don't have confidence in their own company, why should I?
    Reply
  •  
    Jul 23 05:47 PM
    Regarding your comments on Akeena Solar, the last time there was insider selling was back in January (2008). Why are you so late in informing shareholders of this old news? Furthermore, did you happen to read the article in Barrons this past Sunday which was very favorable towards Akeena Solar.
    I also read some of your picks ie. airlines in April. Not a good pick.
    Reply
  •  
    Jul 23 07:18 PM
    I would agree with the last post. Barron's pointed out that even though the incentives for Solar "users" in the U.S. are unknown, they still think that AKNS has a market for the type of solar panels they put up and they have recently been awarded for the product they produce. I would not discount this stock just yet. Wait and see what they do the rest of the year as well as wait for legislation to come about and give people incentives to add solar panels to their homes and small businesses (which is what AKNS targets).

    Why try and make a cheaper stock cheaper by downgrading it. I think we are in a buy and hold situation right now.
    Reply
  •  
    Jul 24 12:00 PM
    This reads like it was definately written by someone who doesnt know what they are doing and just started day trading on E-Trade.
    This company is just fine financially and is going to continue to grow in its part of the solar sector. Which of course is only dependent on end user purchasing of installation / product and the aceptance of Andalay pannels it produces by the installation industry. The awards the Andalay has gotten indicates it will be the prefered installation for home and small business space. The Federal incentive is an added bonus, because most states have an incentive that is current and fairly generous. Also, the industry is seeing boosts from the new Net Metering agreements with the power companies. The new "green" power requirements forced on these companies by state legislators are now allowed offset "Green" requirments by allowing credits when they the power company offers the grid connected consumer Net Metering. Akeena is in a good position in its sector. I definately have to agree at $4.5, it is a buy and hold.
    Reply
  •  
    Jul 24 04:24 PM
    the author is right about an increasing net loss. Akeena isn't profitable yet, as we all know. What the author neglects to mention is that revenue is growing, obviously important for future profitablity because that increasing revenue is going towards building the company, which creates debt. Liabilities have decreased from Sept 07 quarter, and roughly the same as last quarter. And although the number of shares outstanding has changed, it hasn't materially affected stockholder equity.

    It's hard for me to imagine their Andelay offering not being in demand as solar continues to grow, especially with them being in California. And given the current price of the stock, its difficult to imagine there is much more sustainable, long term downside. That's why I'm long.
    Reply
  •  
    Jul 24 09:12 PM
    I originally wrote this post on my site but I submitted it to seeking alpha to get more exposure. If you would like a reply to a comment you should post the comment on my site: intelligentspeculator.....
    Reply
  •  
    Jul 24 11:55 PM
    So now you are using your post as a marketing ploy for your website. I see how it is. I would steer clear of this guys opinions. These are the types of opinions I think Seeking Alpha should avoid in the future. It really takes away from those who really put time and effort into their reasoning for picking (or not picking) stocks.

    And why would posting on your site matter anyway? I am buying more shares of AKNS and when they end up making me money, I will then post a comment on your website.
    Reply
  •  
    Jul 25 10:31 PM
    What about their latest innovative product? Your looking at only past performance and not future potential
    Reply
  •  
    Jul 26 01:57 PM
    As a trader I have not faired well with AKNS. But, Because of my belief in the industry I have been unable to pull the "sell" trigger, hence, I am now an investor. Athough I have added to my position since my initial purchase, I am still deep in the tall grass. On the surface it seems that Akeena is just anather poor ran company, poor management, poor service, poor sales personal. Somebody please give me alittle insight to Akeena's downslide and what it is doing to reverse the trend. I have faith in the industry as a whole, but the light seems to be dimming on Akeena...tell me Im wrong!!!
    Reply
  •  
    Jul 30 03:53 PM
    www.renewableenergysto...
    Reply
  •  
    Aug 05 04:15 PM
    As a disgruntled commercial customer I can testify to the poor sales, service and installation. Akeena botched my project from start to finish.
    Reply
  •  
    Aug 06 03:30 AM
    Qtr after qtr it looks like Akeena sells stock in order to raise cash for their day to day business operations.

    Their assets aren't much, but they have grown significantly YOY. Looks like they are inundated in overhead costs.

    As I am understanding their business, they're more like a design and management company.

    Per the 10-Q (May 14, 2008)

    Their cost of sales rose 4.1% YOY while their net sales grew 51.38% YOY. That's an awesome indication that their business is growing rapidly, albeit unprofitably. Their operating expenses have grown 33.75% YOY, again, while their net sales grew 51.38% YOY. Net losses grew 20.39% YOY.

    They need to control their overhead expenses (i.e. General & Administrative Costs).

    I didn't like that their R&D costs only grew by $197,000 during the 3 months. Although this goes back to the point I raised earlier:

    "As I am understanding their business, they're more like a design and management company."

    Forward looking:

    I believe the steady grow of this company is healthy. I would have liked to have seen profitable growth, but this industry is tough right now. I will continue to monitor the performance of the management and decide within the next two quarters if this is a good investment. So far so good.
    Reply
  •  
    Aug 10 04:21 PM
    Just absorb what CA Kid said. Anyone who holds or buys more of this stock deserves to get their ass kicked.

    Management, Management, Management..........
    Reply
  •  
    Aug 11 10:42 AM
    Why run? think merger... then push current management overboard. As stockholders we have power and a voice. Use the tools


    On Aug 10 04:21 PM gillyak wrote:

    > Just absorb what CA Kid said. Anyone who holds or buys more of this
    > stock deserves to get their ass kicked.
    >
    > Management, Management, Management..........
    Reply
  •  
    Sep 24 12:48 PM
    Vinman - the author is correct on insider sales:
    6/2/08 Daniel Steve Sale 10,000 5/29/08 Lauro George L Sale 7,500 Lauro George L Planned Sale 7,500 5/16/08 Roffman Edward Planned Sale 5,000 5/15/08 Roffman Edward Sale 10,000 Roffman Edward Planned Sale 5,000

    mjs - Perhaps you missed the fact that annual and quarterly income from operations is NEGATIVE and has not improved. Cash from operations is NEGATIVE and has not improved. Increased revenues means they can lose money at a faster rate.

    gillyak is correct. I am down 40% and deserve it.
    Reply
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