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BOSTON CAPITAL
A sunburst at last for Spire
Solar-cell firm's stock soars after years of struggles
By Steve Bailey and Steven Syre, Globe Staff, 10/08/97
BEDFORD - At 57, Roger Little is hardly a Johnny-come-lately hyping
yet another hot tech stock out there on Route 128. But make no mistake, he is sitting on maybe the hottest stock on the block.
Little's Spire Corp. ticked up another 1 5/8 yesterday to close at a record high. Do the math: Spire has exploded from 2 1/4 in mid-February to close yesterday at 19 3/4 a share - an astounding gain of 880 percent in just 7 1/2 months. And Little thinks the stock is not done yet.
Spire, which makes equipment to manufacture solar panels, is not followed by a single stock analyst, and it has virtually no institutional ownership. It is a good example of what can happen when investors start bidding up a tiny, thinly traded stock. Of course, the reverse can happen just as fast when they stop buying.
Little has been waiting a long time for this.
He is a long-distance runner in every sense of the term. At an age when many of us get what passes for exercise in our backyard garden, Little is up at 5 every morning for his 8-mile run. He bicycles 120 miles a week and swims 5 miles in preparation for the dozen triathlons he competes in yearly.
Only a nasty bike accident in August will keep him from competing this
month in Hawaii in his fifth brutal Ironman Triathlon World Championship, the world's premier endurance race.
But Spire has been the most trying marathon of Little's life. In 1969, he thought he saw the future in photovoltaics, or the conversion of light into energy - specifically making solar cells for satellites. He started Spire over a garage in Boxborough. And waited for the future to arrive. And waited, and waited.
When the energy crisis hit in the '70s, Spire switched to solar photovoltaics for those of us still down here on earth. But when oil prices came down, the solar energy business died. Trying to survive, Little used his technology to diversify into optoelectronics and biomaterial products used to make more durable orthopedic devices. Solar, he says, ''was an expensive hobby for 15 years.''
Now, however, solar is showing the kind of growth its advocates always
predicted. Sales of the solar panels themselves have grown 25 percent a year for five years, according to the Solar Energy Industries Association, a Washington trade group. Industry sales were $395 million last year and should grow at more than 30 percent a year through the end of the decade, the group says. Sales of complete solar systems topped $1 billion in 1996.
Seventy percent of all sales are to the Third World; more than 2 billion people, a third of the world's population, still don't have electricity. Demand is being driven by the need for wireless power for wireless communications, continuing concerns about the environment, and even the growth of democracy. After all, despots will need votes if they're to hang on, and those voters want - what else? - TV.
In the United States, the Clinton administration earlier this year announced a plan to install solar panels on 1 million rooftops as part of a strategy to reduce the nation's dependence on fossil fuels.
Those trends are driving Spire's business - and its stock.
Spire's revenues have been flat throughout the '90s at about $17.5 million. It has made money only one of those years, losing a total of $2.1 million over the seven years. But Spire has made money for the last three quarters, and Little predicts revenue to grow to as much as $24 million this year. The firm, which reported $852,000 in profits for the first six months of the year, could make $2 million this year, he says.
The solar business is the engine. Revenue from photovoltaics should jump 80 percent to $9.5 million this year, Little says. He predicts solar revenues should grow to $30 million to $60 million in five years if they just track the industry. Revenues could be ''three to four times that'' if the company is able to execute a plan to sell systems to manufacturers in developing countries.
With better results, Little has been looking to do something about the
depressed stock price, which has spent most of the years since the company went public in 1983 in the 2 to 4 range.
Earlier this year, shareholders approved a plan that would have allowed the company to reorganize its three operating divisions into separate publicly traded units, along the lines of the highly successful Thermo Electron Corp. But the idea was scrapped after investment bankers told Little the units were too small to be viable.
Little also started waving his arms a bit. He started with a presentation to the American Electronics Association on the West Coast in the spring, and later hired an investor relations firm. He recently pitched his stock to institutional investors at a luncheon at Maison Robert in Boston.
Didn't Little, as chief executive, have an obligation to do something about the stock earlier?
"I didn't have the numbers to support it,'' he says. ''I can blow smoke with the best of them. But that gets old quick.''
Little has gained a believer in Franklin Research & Development Corp., a socially responsible investment firm in Boston that took a 1.2 percent stake over the summer. Patrick McVeigh, a senior vice president, in July set a target price for the stock of 10 when it was selling for 5. He has since raised that to 25.
At the current 19 3/4, Spire is selling for an astronomical 131 times trailing earnings. But if it makes the $2 million in net income, as Little predicts, Spire would be selling for about 30 times its '97 earnings, in line with the current price-earnings ratio for the Russell 2000 index. Tiny stocks like this are notoriously volatile. Even with the big run-up, Spire still has a market capitalization of just $61 million, up from what Little calls ''an embarrassing'' $7.5 million valuation as late as March. McVeigh says his chief concern is that a slowdown in Third World economies could slow the push for solar power.
Another issue: Three key executives at Spire have been selling large chunks of their stock in the last three months as the price has risen.
''I don't blame these guys for selling. They have been hanging on for a long time,'' says Little, who still owns 48 percent of the company and hasn't sold.
The company's retirement plan holds another 20 percent of the stock.
The company has been talking to investment bankers about a secondary
stock offering, which would raise new capital and increase the available shares. Little says he could also sell the biomaterials business, the unit that has paid the bills for years, in an effort to focus on photovoltaics.
Little, the triathlete, knows about potholes: The one he hit on his bike in August put him in the hospital for three days with broken ribs, a punctured lung, and a concussion. But he doesn't think that's about to happen to Spire.
''What I like about this business is you cannot think of a scenario that is going to stop it - short of the sun going away,'' he says.
Yesterday, walking around his Bedford headquarters, Little was frank in saying he has felt like less than a success through his years of struggle at Spire. What would have happened, he wondered, if he had chosen computer chips?
"It is satisfying to have flogged this so long to see this happening,'' says Little, who grew up in Adams as the son of a policeman and a nurse.
And, finally, rewarding: His shares, worth $3.3 million in February, were worth $28.7 million at the end of yesterday's business day.
Steve Bailey (929-2902) and Steven Syre (929-2918) can also be reached
by e-mail at boscap@globe.com.
This story ran on page D01 of the Boston Globe on 10/08/97.
c Copyright 1997 Globe Newspaper Company. |
