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Workers wait for President Barack Obama to take the stage during his visit to Solyndra, in Fremont, Calif., on Wednesday, May 26, 2010.

The withdrawal of Solyndra Inc.'s initial public offering might be due to the Fremont company's pool of red ink and shaky financial markets — but the IPO cancellation nevertheless darkens the outlook for solar energy, some analysts said Monday.

The maker of solar cylinders — whose fortunes sparkled with high-profile visits to its Fremont operations from President Barack Obama and Gov. Arnold Schwarzenegger — was tarnished at the end of last week by its decision to scuttle a first-time sale of its stock to the public.

At one point, Solyndra had planned to raise $300 million through the IPO. Instead, Solyndra plans to raise $175 million from some existing private investors.

Why are investors nervous about Solyndra? The company has lost $558 million since its inception in May 2005. Plus, its production costs exceed its foes.'

"Unfortunately, Solyndra's IPO cancellation will be viewed as representative of the whole solar industry," said Shyam Mehta, a senior analyst with GTM Research, which tracks the green tech industry. "It could be looked at as a failure for the whole solar industry. Solyndra is such a high-profile company."

The governor and the president both praised the 2,000 jobs Solyndra will create. In March, the federal government announced a $535 million loan to help power its expansion.

"The Solyndra situation is an isolated problem," Mehta said. "The solar industry has made tremendous progress toward cost reductions for its products in the last 12 months."


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A stream of financial losses at Solyndra is among the visible woes for the manufacturer of cylindrical tubes that collect the sun's rays.

During 2009, Solyndra lost $172.5 million, significantly smaller than its 2008 loss of $242.5 million.

"Solyndra's problems didn't cause the solar industry to have a problem, Solyndra is an example of the issues that face the solar industry," said Aaron Chew, an analyst with Hapoalim Securities USA.

Falling prices are a huge challenge for the solar sector. Manufacturers have become more adroit at making solar systems more cheaply.

"You can quickly have a profitable business turn into an unprofitable one overnight in the solar industry," Chew said.

At the end of 2009, Solyndra reckoned that its manufacturing costs were $4 per watt, a regulatory filing showed. First Solar, which has some East Bay operations, estimated it could produce panels for $1 a watt.

Even worse, Solyndra's nagging operating losses and accumulated deficits raised red flags for the company's auditors, even before the IPO vanished. The auditor had "substantial doubt" about Solyndra's ability to survive.

Solyndra touted the $175 million private investment as a signal of continued confidence.

"This funding allows us to address strong customer demand by maintaining our aggressive growth plans," Chris Gronet, Solyndra's chief executive officer, said.

During 2009, Solyndra generated $100.5 million in revenue — nearly 17 times greater than the revenues in 2008 of $6 million.

Solyndra expects to launch the first production of solar components from its second factory, located in Fremont, to begin late in 2010..

Other solar companies are profitable.

San Jose-based SunPower Corp. generated $58.3 million in profits on sales of $1.66 billion for the 12 months that ended in April.

Still, investors seem queasy about solar. Publicly held companies similar to Solyndra have seen their shares sag over the last year, as of Monday, by amounts ranging from a 21 percent decline to a 49 percent decline posted by SunPower.

Some analysts believe that solar still has a bright future.

"I continue to be optimistic about solar technology of the kind Solyndra pursues," said Alex Gauna, an analyst with San Francisco-based JPM Securities.

The Solyndra struggles also may be an embarrassment for federal officials.

"Some people are now saying that Solyndra is too big to fail," Mehta said. "It looks very bad for the Obama administration."

Contact George Avalos at 925-977-8477