Recent stock prices of Petaluma-based Enphase Energy trace a grim trajectory across a dark sky. The stock gleamed at nearly $17 a share in September 2014 then plunged some 94 percent in the past two years to lows near 97 cents in December. At recent prices near $1.50, Early investors who paid $6 a share at the initial public offering in March 2012 lost 75 percent of their money if they held.
A technology startup in 2006, Enphase innovated by equipping each solar panel with a small inverter that changes direct current from solar cells into alternating current used in household circuits. AC electricity travels more efficiently than DC, loses less energy and is safer. The inverters run at 97 percent efficiency.
As Enphase started a decade ago, the solar industry appeared bright. A wholesale watt (voltage x amps) of panel capacity sold for nearly $5 then because a shortage of crystalline silicon drove prices up. Now a solar-panel watt of electricity sells for just 65 cents, dipping a dime from a year ago and down 86 percent from the top.
In August 2016, Enphase launched measures to survive near-term challenges then reenergize the company long term. It began shipping batteries to solar-array customers in Australia and New Zealand as a new trickle of revenue to augment sales of panels.
In September Enphase held a public offering for 13 million shares at $1.20, aiming to reap $15 million before expenses. The same month, the company laid off 11 percent of its employees, and TheStreet Ratings rated Enphase stock over a 12-month horizon as a “sell,” graded D-, with lackluster growth in earnings per share, poor net income and return on equity, bad profit margins and high debt.
Those 2016 shots at revival weren’t enough. In January 2017, Enphase reported a $5 million investment by John Doerr, chairman of venture-capital giant Kleiner Perkins Caulfield & Byers, and another $5 million by Thurman John Rodgers, former CEO of Cypress Semiconductor. Rodgers will join the Enphase board. At the end of January Enphase did a bigger layoff of 18 percent —75 full-time employees plus a dozen contractors.
“They didn’t make it conditional on the layoff,” said Paul Nahi, CEO of Enphase, of the $10 million from Rodgers and Doerr, who got their shares at a deep discount — about $1. But “it was very important for them that we achieve profitability as quickly as possible. That was one of the elements.”
Enphase lost $18 million in a recent quarter, nearly $60 million over a year with $350 million revenue. It has an accumulated deficit near a quarter of a billion dollars.
Investments by “T.J. Rodgers and John Doerr were a tremendous sign of support,” said Nahi. “They see the potential for Enphase.” But for a company losing $18 million a quarter, how far does $10 million go? New offerings also can dilute the value of existing shares. The T.J. Rodgers investment involved 5.4 million shares and represents 8 percent of the share class, according to the company’s Schedule 13G filing with the SEC on Jan. 9.
“In reference to the reduction in force, it is an unfortunate reality in this business,” Nahi said. Overall savings from the layoffs in 2017 will be in the tens of millions of dollars. He expects Enphase to be “profitable in the second half of 2017. We took action in order to pull profitability in from the second half. We have a very aggressive cost-reduction curve,” he said.