Home
J.P.Morgan is out a with a new bold report titled "Energy Conversion Devices, Inc. Focused on Cash Preservation, Trading Below TBV Par, Risk vs. Reward Looks Favorable, Initiating at
Overweight."
It would be interesting to find out what JPMorgan's understanding of
cash and cash preservation is. Because the evidence that ECD is
interested in cash preservation is scant. In fact, on an annual basis,
the company has never generated positive free cash flows (defined as Cash Flow from Operating Activities less Capital Expenditures, or, in ECD's terminology, as NET CASH PROVIDED BY OPERATING ACTIVITIES less Purchases of property, plant and equipment [including construction in progress]
) in its 40+ year history - that is almost certainly the only company
in the world to achieve such a record. And in the latest reported
quarter, March 2009, ECD's management burned through almost $94 million
(CFFO-CapEx), a new all-time high for ECD.
Given that Unisolar cannot sell profitably
in in the current market, the tangible book value will continue to
decline. I guess ECD's management did not share that secret with the
J.P.Morgan analyst.
The report also touts
Unisolar's "differentiated" product as far as BIPV in Europe is
concerned, failing to explain why Unisolar is actually a second-tier manufacturer in that market, with less than 10% share.
More later.
