Semiconductor Stock SunPower Opens Up 55% After IPO
By Lynn Cowan Of DOW JONES NEWSWIRES
November 17, 2005 11:43 a.m.
This week's second initial public offering in the semiconductor industry got off to a strong start Thursday, its first day of trading.
Shares of SunPower Corp. (SPWR) opened at $28 a share on the Nasdaq, up 55% from its IPO price of $18 a share. The Sunnyvale, Calif., maker of solar power products, which was a unit of Cypress Semiconductor Corp. (CY) until its carve-out this week, sold 7.7 million shares of its stock at the high end of the expected range set by underwriters Credit Suisse First Boston and Lehman Brothers Holdings Inc. (LEH). The underwriters boosted the range Tuesday from its previous level of $12 to $14. The stock was trading recently at $25.67 a share, up 43%.
SunPower's IPO follows on the disappointing debut of Chinese semiconductor designer Vimicro International Corp. (VIMC) on Tuesday. That stock closed down 16% from its IPO price of $10 a share, and was trading Thursday at $9.04, down 10%. Vimicro's prospectus revealed concerns about its accounting controls, including a lack of personnel with U.S. GAAP experience, and warned that it might not be able to fix its problems in that area.
SunPower had no such accounting issues. Its role as a high-power solar-cell maker comes at a time when the world is grappling with rising energy costs from traditional petroleum sources, and governments are likely to continue or increase the financial incentives for the use of alternative energy products like solar cells.
But SunPower's deal wasn't without risk: The company, which was incorporated in 1985, has reported net losses since its inception, and warns it might never become profitable. Currently, it is grappling with an industry-wide shortage of polysilicon, the primary material in its products. The price of polysilicon, which is created by refining quartz or sand, rose 40% to 80% in 2005, and SunPower expects the cost to continue increasing.
SunPower, which says it has enough polysilicon contracts to ensure an adequate supply through 2006, plans to use proceeds from its IPO to expand its manufacturing capacity and for general corporate purposes. |
