First Solar Inc.'s second-largest shareholder sold half his shares, a signal that the world's biggest solar company may soon fizzle.
Chief Executive Officer Michael Ahearn reduced his stake to 3.07 million shares as of May 16 from 6.1 million shares at the company's initial offering in November, 2006. The latest disposals brought in $257 million since Feb. 19, according to company filings with the U.S. Securities and Exchange Commission.
"That's a remarkable withdrawal for a CEO and I wouldn't want to see him sell off much more," said Robert Lutts, who manages more than $500 million as chief investment officer at Cabot Money Management, including 18,953 shares of First Solar. "He's taken enough out to change his lifestyle."
The sales came as the Phoenix firm told investors in regulatory filings that its cells made of toxic cadmium-telluride may be banned in the European Union, its biggest market. Declining subsidies risk hurting sales, while metal costs are rising and solar-panel prices are slipping.
The company began in Toledo as Solar Cells Inc. and has its only North American manufacturing plant in Perrysburg Township. It shipped solar panels to Germany for years until it built and opened a plant there. It also is building four plants in Asia.
Mr. Ahearn, 51, became CEO in 2000 after working four years at billionaire John Walton's venture capital firm, True North Partners, the solar firm's initial backer. John Walton's estate and siblings, heirs to the Wal-Mart Stores Inc. fortune, are the biggest First Solar investors, holding 44 percent. Mr. Ahearn is a lawyer by training who is running his first public company.
The CEO, who retains a 3.85 percent stake worth $822 million, declined through a spokesman to be interviewed.
The firm's shares fell $11.58 yesterday, or 4.3 percent, to $255.96 on Nasdaq. At its current price, First Solar's market value is $20.4 billion, more than twice that of General Motors, the world's largest carmaker.
But cadmium, a toxic metal according to the U.S. Labor Department, is linked to breathing and kidney disorders. It's banned from use in batteries and related electronics in the European Union, where First Solar gets more than 90 percent of its sales.
An expansion of EU restrictions to solar cells would make the company's current technology "impractical," First Solar said in a Feb. 21 SEC filing.
The firm promises to dispose of the material at the end of a solar system's useful life, estimated at 25 years. As of March 31, First Solar said it accrued $18.1 million in collection and recycling liabilities.