Guest essay by Eric Worrall
SunEdison, whose share price has plunged by around 75% in the last few months, is rumoured to be on the verge of laying off a significant number of staff.
According to Greentech Media;
With its stock price taking a hit, SunEdison is planning a deep cut to its workforce, according to a memo obtained by GTM.
Investor confidence had been wavering for some time. Many were having a hard time understanding SunEdison’s acquisition spree — specifically, the $2.2 billion purchase of the residential installation company Vivint Solar in July.
Executives called the Vivint acquisition a big step toward creating the first renewable energy supermajor. The street wasn’t fully convinced of the plan.
With its stock still under pressure, SunEdison is now culling its workforce. According to a company-wide memo from CEO Ahmad Chatila released on September 30, SunEdison will be laying off around 10 percent of its 7,300 employees. Many employees received notices on Friday.
“Overall, the proposed changes result in an overall reduction of about 30%, 20% being from non-labor expenses and about 10% from headcount reduction. And this process will take some time to complete. Most of the changes will be announced during the fourth quarter with some final steps expected in the first quarter of 2016,” reads the memo.
According to Yahoo Finance, over the last 52 weeks Sun Edison’s share price has crashed from a mid July high of $33.45, to a low of $6.56, recovering slightly to the current price of $8.33.
Sun Edison may have been hit hard by the recent global trend of governments scaling back subsidies for renewables. They have spoken out on several occasions against cutbacks to government subsidies for solar energy.
Sun Edison share price is obviously quite volatile, so it is impossible to say at this point whether the current fall represents a blip, or something more serious. For example, a strong renewable commitment from Paris COP 21, or renewed government interest in supporting solar energy, might lead to a recovery in Sun Edison share price.
Has Sun Edison has received federal loan guarantees from the US government? I couldn’t find any definitive information about this – but given Obama’s recent pledge to dramatically increase federal assistance for renewable energy, such guarantees are a possibility.