What’s becoming clearer and clearer every quarter is that balance sheets matter, not just for investors, but also for solar installers. Solar modules come with warranties, sometimes stretching as long as 25 years, and if a customer questions whether a company will be around in only a year or two, they may choose another option. Since Chinese modules vary very little from a performance perspective, the customer may choose a better-capitalized company like JinkoSolar Holding Co., Ltd. (NYSE:JKS) instead of Yingli Green Energy Hold. Co. Ltd. (ADR) (NYSE:YGE) or LDK Solar Co., Ltd (ADR) (NYSE:LDK), or even move to a U.S. company like First Solar, Inc. (NASDAQ:FSLR) or SunPower Corporation (NASDAQ:SPWR) . As financial conditions get worse at these companies more and more customers leave and the problems get worse, creating a downward spiral. LDK and Suntech are the poster children for this and are a major reason investors need to stick with quality in solar.
The article Death Spiral Continues for LDK Solar originally appeared on Fool.com.
Fool contributor Travis Hoium manages an account that owns shares of SunPower. He personally owns shares of SunPower and has the following options: Long Jan 2015 $7 Calls on SunPower, Long Jan 2015 $5 Calls on SunPower, and Long Jan 2015 $15 Calls on SunPower. The Motley Fool has no position in any of the stocks mentioned.
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