First Solar’s Ahearn, Wal-Mart Protege, Slashes Stake

Feb. 25 (Bloomberg) -- First Solar Inc. Chairman Michael J. Ahearn, who steered the solar-panel maker into the S&P 500 index after it was funded by the Wal-Mart Stores Inc. family fortune, sold more than 40 percent of his holding for $142 million.

Ahearn sold 1.3 million shares at an average price of $109.05, according to a filing yesterday. He began selling on the first trading day after releasing fourth-quarter earnings on Feb. 19. The stock fell $2.16, or 2.1 percent, to $102.97 in Nasdaq composite trading.

First Solar, originally funded by billionaire John T. Walton in 1999, is falling with many solar companies around the world as they fight a squeeze on profits from the recession, less financing and tumbling prices for solar panels. Walton’s estate and trusts, the largest holders of First Solar, have also been selling shares.

“This is a clear signal that he sees headwinds,” said Gordon L. Johnson, head of alternative energy research at Hapoalim Securities USA Inc. in New York who is reviewing his $90 target price on the stock. “This should send a very negative signal to those who are long this stock.”

Ahearn served as chief executive officer of the Tempe, Arizona-based company from 2000 until 2009. He previously worked four years at Walton’s venture capital firm, True North Partners, the solar company’s initial backer.

After stepping down as CEO “his role was to lobby governments to continue to provide incentives to the solar industry,” Johnson said. “He is not succeeding in his efforts.”

Short Selling

Alan Bernheimer, a First Solar spokesman, declined to comment on Ahearn’s stock sale. Ahearn didn´t return calls.

Thirty-one percent of First Solar’s freely traded shares were borrowed to sell short as of Feb. 12, the greatest percentage among S&P 500 stocks, according to the most recent market report. Generic drugmaker Mylan Inc. ranked second.

“The shorts are going to sit there and scream, ‘A-ha I told you so!’” said Paul Leming, a solar analyst associated with Soleil Securities Group with a “sell” rating on the stock.

First Solar has lost about 20 percent since its earnings compared with the benchmark´s 1.6 percent drop in the period.

The company has been expanding into designing, engineering and building utility-sized power plants, such as a 21-megawatt project in Blythe, California, which has trimmed profit margins.

First Solar saw gross profit fall to 42 percent of net sales in the fourth quarter from 54 percent a year earlier as it moved away from selling solar equipment to other developers, the company reported last week.

Subsidy Cuts

Germany, the biggest market for solar panels, is preparing to cut subsidized rates for power from photovoltaic panels. Solarworld AG, Germany’s largest solar-module maker, fell to its lowest level in more than four and a half years today after reporting 2009 profit dropped 42 percent.

“The industry faces enormous challenges over the next two to four years,” analyst Leming said.

First Solar was downgraded to “neutral” from “buy” by UBS AG last week. Theodore O’Neill, an analyst at Wunderlich Securities, recommended investors sell First Solar stock Feb. 23 and cut its target price to $90.

The company’s thin-film photovoltaic panels use the semiconductor cadmium telluride to increase the efficiency of power generation on both hot days and cloudy days, the company said on its Web site.

To contact the reporter on this story: Ben Sills in Madrid at bsills@bloomberg.net


First Solar?s Ahearn, Wal-Mart Protege, Slashes Stake (Update5) - Bloomberg.com

__________________