First Solar Falls After President Announces Plans to Step Down

First Solar Inc. (FSLR), the world’s largest maker of thin-film photovoltaic panels, fell the most in almost four weeks after announcing that its president of operations will leave the company.

The world’s largest maker of thin-film photovoltaic panels dropped $3.83, or 2.7 percent, $140.90 in Nasdaq Stock Market trading today, the biggest daily closing decline since March 18. The company said yesterday that Bruce Sohn will step down as president of operations at the end of this month.

Sohn’s decision may be related to a 2009 management shift when the Tempe, Arizona-based company’s chief executive officer Michael Ahearn became chairman, and was replaced by an outsider, Rob Gillette, according to Mark Bachman, an analyst with New York-based investment bank Auriga USA LLC.

“Some people believed that Bruce Sohn might have been the heir apparent” at the time, Bachman said. “Everybody aspires to have those three letters after their name, CEO,” and Gillette may have “impeded his path.”

It’s “very possible” that Sohn may end up running a rival solar company someday, Bachman said, after a non-compete agreement expires. He rates First Solar’s shares as “hold.”

According to a First Solar filing yesterday, “Mr. Sohn will not compete with the company or solicit company associates for 24 months after termination of his employment.”

Manufacturing Expertise

Sohn, 49, joined the company from Intel Corp. (INTC) in 2007, and his expertise was in developing a reliable manufacturing process, Bachman said. Those skills were invaluable at First Solar, and may be equally valued at another solar company.

Nathaniel Bullard, lead solar analyst for North America at Bloomberg New Energy Finance, said that Sohn may move into other areas. “My guess is that he lays low for a little while and either enhances his government activity with his involvement with the U.S. Chamber of Commerce’s Manufacturing Council, or enters venture capital,” he said.

First Solar said that Sohn won’t be replaced after his departure, effective April 30.

Bachman said it’s notable that the company will not find someone to take over the role, a sign that the task of developing the company’s manufacturing technology is largely complete.

“That heavy lifting has been done,” he said. “Now it’s a reiteration process.”

Wanting ‘More’

Sohn’s position has become “less significant than when he joined the company in 2007 and we can see how he would want more, not less,” Timothy Arcuri, an analyst with Citigroup Global Markets Inc. in San Francisco, said in a research note yesterday. Arcuri rates First Solar’s shares as “hold.”

“We would not be surprised to see him pursue other opportunities in a more CEO-type role. Our recent field work has not revealed any major operational or FSLR-specific issues.”

Sohn oversaw the construction of four manufacturing plants in Malaysia. “His leadership in establishing and building our manufacturing capabilities on a global scale has been a key driver of our success,” Gillette said in the statement.

Bullard suggested another option -- that Sohn will take time off. “The years of ramp-up to global commercial operations are extremely busy for any executive.”

Bachman didn’t expect Sohn’s departure to drive the company’s share price. “It probably shouldn’t move,” he said. “The share price is predicated on being able to sell product,” and Sohn’s departure doesn’t change First Solar’s ability to produce and deliver solar cells.

A First Solar spokesman said he couldn’t comment on Sohn’s departure.

To contact the reporter on this story: Ehren Goossens in New York at egoossens1@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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