The Silicon Valley Business Journal is reporting that Akeena Solar, Inc., a major designer and installer or solar systems, had to revise its earnings estimate for 2008 from its previously reported figure of 30-40% down to 25-30%.
In most years, 25-30% returns would be considered by most to be a job well done, and even more so in this difficult era of crumbling stock values. But not this year. Despite Akeena Solar’s job well done, the company’s stock price declined by 80% during 2008 over the previous year and the company had to cut staff. And Akeena is not alone: across the sector, clean tech companies' stock values are down dramatically.
It’s hard to believe that prospects for the clean tech industry would appear so gloomy so shortly after clean tech appeared to be investors’ darling during early 2008.
Many industry analysts are wondering whether clean tech companies are just in a temporary ditch. Commentators have pointed to the possibility of rising gas prices and the incoming Obama administration as bright spots which may help the clean tech and solar industries to turn around.
Some industry veterans are optimistic. Pagemill Partners LLC Managing Director Michael Mitgang told the Business Journal:
“While oil prices have declined in the short run, we don’t expect them to remain low for long. Also, the new administration is planning huge spending programs that will include programs in cleantech and renewable energy. We expect continued activity in the sector, though not at the pace seen in 2008.”
Many venture capitalists who invest in clean tech have changed their approach and reduced their investments. In Sunday's New York Times, reporter Claire Cain Miller wrote that "big, expensive projects like building factories to manufacture solar panels or biofuels are falling out of favor," although she noted that overall funds invested in Clean Tech was up through September of last year, from $1.9 billion to $3 billion.
No matter your view, the new administration will have to act fast. With many job losses arriving on the heels of 2008, it’s likely that the economic downturn is going to get worse before it gets better.
President Obama will have the most capital early in his term, and a limited window of opportunity to enact the kinds of major sweeping changes which could have a quick impact upon the economy.
Companies will also have to be careful to maintain efficient staffing levels, trim extra costs, and focus on revenue-generating areas of their businesses to be prepared for long-term doldrums in case the turnaround does not come right away. Clean tech companies are also well advised to put off major purchases and major outlays of capital for a little while. In difficult economic times, it seems there is no substitute for belt-tightening.