Solar Power Inc. (fka SOPW)

[Osprey9]

Welcome john302!
As for the high SG&A costs, I believe they are relatively high because the company is covering a number of levels on the vertical supply chain. They own and operate a factory in China, run a professional installation group in California and are opening a franchise to sell to individual homeowners. The company is doing quite a lot of investment to add value at all of these levels. This allows the company to be prepared in three major markets:

1) Direct Solar Cell sales from the factory to foreign distributors (profit margins 10-13%)
2) Professional Installations such as the recent news about sales to apartment complexes (profit margins 20-25%)
3) Individual home owner sales through a franchise (profit margins- - my own estimate - 15-20%)

Success in any one of the three (and the direct sales seem to be taking off first) will cover the SG&A. If they obtain success in two the company stands to turn quite a nice profit. If three, well then, I certainly wouldn't complain :)

Lookup the backgrounds of the management and I think you'll be quite pleased with who is on board. The company has responded quite quickly to the market environment (look at how quickly they were able to recover and pull in the $20 million korean order).

Bottom line: I believe the SG&A is money well spent. They need to expand quickly to capture sales of the current generation of solar sales and they are executing as we speak. I'm looking forward to the 2nd quarter meeting.