Outlook '08 - Solar


One of the biggest names in solar gives you next year's outlook on the hottest trade of 2007.

Cypress Semiconductor (CY) Chief Executive T.J. Rodgers joins the panel for this conversation. Following is a synopsis of his main points.

How’s demand?

“Demand is very high,” says Rodgers. “For the last 3 years we couldn’t make enough so demand is off the charts.. for the next year we will sell everything we can make.”

As the price of crude goes up – does your business increase?

“Only about 6% of power is created with oil so it shouldn’t be connected (to solar,)" explains Rodgers. “But the fact is, people who want solar power want to make the world a greener place and are very concerned about oil. So people who buy it – do so to make the world a greener place. But solar and oil really aren’t that well connected.”

In other words, you’re saying power plants are usually run by coal or hydro-power, not oil?

Exactly, replies Rodgers.

What’s solar capacity now versus two years from now?

“I think capacity could double in 2 years if we had enough silicon, says Rodgers. “But I don’t think there’s enough silicon coming online… our capacity will be limited by how much silicon we get.”

Talk about your chip business?

"SunPower Corporation (SPWR) is a subsidiary of Cypress," explains Rodgers.

Is SunPower stock getting ahead of itself?

“We’re driving the price (of solar) down and the more the price goes down, the more the demand is going up,” says Rodgers. “So the fundamental of the business is good.”

He adds, “Regarding share price, I rarely made a prognostication that’s right. I think SunPower is fully valued. If you look at the company as it stands today you might say it’s fairly valued. But then you look at their annual plans for 1-2 years and you say they’re going to grow into that pretty fast.”

Dylan Ratigan asks the panel what they think of this stock.

Jeff Macke says it's compelling and recommends investigating further.


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