First Solar

First Solar has become the first pure-play renewable energy company to make it to the Standard & Poor 500 Index, despite on-going concerns that the solar energy sector will struggle to maintain current growth rates. Although the recession has caused its stock price to drop, First Solar has consistently exceeded revenue and earnings expectations, reporting that sales more than doubled last year to more than $1.2 billion.

The company has also continued to reduce the average price of its solar panels, announcing earlier this year that it had broken the $1 per Watt mark for production costs.

But according to Reuters, concerns remain among some market analysts that the supplier – as well as rivals such as China's Suntech Power Holdings Co Ltd and California's SunPower Corp – could be using overly aggressive accounting methods to support their earnings growth. The worry is that their respective cash flows are starting to lag behind profit levels because they are failing to collect on revenues. This scenario means that it may not be possible to sustain current earnings growth into the long term.

It told the news agency that during the first quarter it stretched payment terms from 10 days to 45 days, bringing it more in line with the industry standard, while shipping times to Germany from its Malaysian factory were also longer than usual. The impact of this situation was fully felt in the second quarter and resulted in an additional $93 million (£56.7m) going on its books in terms of revenues owed by customers.

By the early 2000s, however, the firm had successfully commercialised the technique and filed for an initial public offering in November 2006. The shares were issued at $20 (£12) each, but hit $200 (£121) within a year.