In This Edition...

* Another 'Sneak Preview' of Friday's Stock
* The Future of Solar Power 

Another 'Sneak Preview' of Friday's Stock

Don't forget to check your e-mail sometime after this Friday's close. As we mentioned last week, you'll find a new company profile then. The Micro Cap Press editorial staff is putting the finishing touches on our research, and we believe you're going to be as excited to learn about this company as we are to present it to you.

To hold you over in the meantime, we don't mind divulging some of the themes we'll be detailing then. In no particular order, we can say these things about the company:

* Their 2008 Q2 revenue was more than three times that of 2007's Q2 revenue. 
* In the last couple of months, the company has signed contracts worth more than Q2's (2008) total revenue. 
* Those recent contracts are only about 5% of the orders they already have, and are waiting to fill. 
* The kind of business they're in is close to being mandated by the government. 
* Their product saves companies money, and helps save the environment too. 

The Future of Solar Power

Normally the Micro Cap Press staff does its own research, finds its own stories, and comes to its own conclusions. Yesterday, however, an Investor's Business Daily story hit close to home by touching on one of our adopted focal points - solar power.

We're not going to recap Brian Womack's entire story; you can read it for yourself here. We just wanted to highlight some of the points we felt were critical, and add our take. 

In a nutshell, next year's solar panel demand was expected to shrink, ultimately sending the price of solar panels lower. That theme has been discussed several times in 2008, though the IBD story specifically mentioned prices of panels could sink between 10% and 20%. 

Part of the price drop also has do with supply; there are dozens of companies now manufacturing and selling solar panels at a pretty brisk pace. So, competition is stiffening to the point where the technology is starting to trade like a commodity. 

The story also made a point regarding financial incentives, specifically using Spain as an example. Spain's demand for solar power in 2008 was enormous. However, it was also highly encouraged by the government's incentive program. For 2009 though, the incentives are likely to halt. The assumption is that demand will also freeze, since the technology is rather expensive - up front - compared to alternatives. In fact, the tapering of demand from Spain was largely the reason for a less-than-enthusiastic solar panel outlook for 2009. 

If the expiring incentive story rings a bell, it may be because the United States' government has also all but dropped incentives to encourage a variety of alternative energy usage. The end result is the same here - the technology is too expensive without subsidies, so manufacturers would need to cut prices to spur demand. If margins are narrow though, cutting prices could push a manufacturer into the red. See the dilemma? 

The key to it all is something we mentioned in the blog back in July. Ultimately, for a solar panel company to be successful, they have to be able to create electricity for the equivalent to somewhere between 8 and 12 cents per kilowatt hour...without subsidies. Some are getting close, but some of those also rely on help from the government. 

The good news is, as the technology advances it becomes cheaper and more effective. The even better news is, polysilicon (the key component and expense of solar panels) prices are starting to taper off. The bad news is, it still may not help enough to offset the loss of any financial incentives in whatever country is in question. 

That's been one of the big challenges (if not the biggest) with alternative energy investments. The ideas are brilliant, but so far are relatively expensive compared to traditional energy creation. These companies will have to be viable on their own to get past any legislative risk, since the subsidies won't always be there. Some companies will achieve it, while others won't. We suspect this will be at the core of any discussions and analysis going forward. 

By the way, this is an idea that will have even more meaning - in a good way - when you read Friday's company profile.

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