Obama Ignores “Going Concern Doubt” Analysis
Before Cheerfully Subsidizing Solyndra
Did you know that the recently bankrupt Solyndra, green-tech firm propped up with $535 million federal assistance wanted to go public? That they wanted to go public and sell stock in the company even before Mr. Obama began touting them? That the planned initial public offering (IPO) was abandoned. That one of the steps required before any IPO is an audit of the company finances and an examination of their business plan for the future? That the solar-power panel company’s finances were so awful that two months before an Obama visit to Solyndra the accounting firm of Pricewaterhouse Coopers LLC warned investors that Solyndra had financial problems so deep that they “raised substantial doubt about it ability to continue as a going concern?” Did you know that the standard wording from audits which use the word “doubt” and “going concern” in the same sentence is known in the business world as the “Kiss of Death” letter and means that over 80% of the firms so described will NOT be in business a year from now?
Did you know that a day before Solyndra went belly-up that the Energy Department turned down a request to renegotiate the loan agreement because another “restructuring was not feasible.” Did you know that one month before that . . . Solyndra executives were allegedly telling California representative Henry Waxman that everything was going great and the company expected to “double revenues in 2012? Does that mean they expected to lose twice as much money as well? Could it be they hoped Rep. Waxman would take their threat** as a promise? Did you know Solyndra spent more than $480,000 on lobbying in Washington in the last 365 days? Could it be they hoped Congress and the Obama administration could be cajoled into helping them endlessly?
Three more questions? Would you have been as cheerful knowing the financial status of the company as President Obama and Vice President Biden were during their many Solyndra photo op visits? Do you believe, as your blogger Rajjpuut does, that Mr. Obama’s proclivity for throwing money at problems (a mere cash infusion will make everything okey-dokey at Solyndra right away) blinded him to the reality that Solyndra was a losing proposition, a reality that any sensible person should have seen? Would Obama have invested HIS money as recklessly as he did YOURS? Does the FBI routinely raid bankrupt companies? Oooops, that’s four questions.
On his May 2010 photo op when Obama told America that the Solyndra California factory he was visiting, subsidized by U.S. taxpayers displayed “the promise of clean energy isn’t just an article of faith.” Despite the two month lead time to read over and understand the Pricewaterhouse financial analysis, it appears certain that Mr. Obama did believe that throwing money at Solyndra’s way would “turn the ugly duckling into a swan.” Mr. Obama also seems to be ignorant of the fact that good money can be sent after bad, but never should be. The inevitable abandonment of the IPO; the whole history of Solyndra’s existence (never once showing a single profitable quarter in five years); and then allowing a last-minute effort to refinance with taxpayers (the most important investors) taking a back seat to the new investors . . . none of these obvious red flags seemed to alarm the president about OUR money. Mr. Obama refused to accept what was obvious to anyone who chose to open their eyes and their mind.
Eric Shultz, a Whitehouse spokesman, thinks we’re all stupid and that it’s still possible to pull the wool over our magnifying glasses and fool us about Solyndra and Obama’s green-tech initiatives. Schultz said in an e-mailed statement that selection of companies to receive U.S. backing are “merit- based decisions made by career staffers at the Department of Energy. He added that the process for this particular loan application had begun under President George W. Bush, not mentioning that the loan was denied for three consecutive years by the Bush administration. “Every project that receives financing through the Energy Department goes through a rigorous financial, legal and technical review process.” WOW, really??? Really??? Let’s see now?
The Obama $787 Billion stimulus was supposed to create jobs. So far the green-tech initiatives (Mr. Obama promised to create five million new green jobs in his first term) have created roughly 3,500 jobs total at an average cost of $10.88 MILLION per green job taking an average of 1.4 years to create each job. Solyndra just laid off 1,100 workers when it filed for bankruptcy. Exactly how “rigorous” is this financial, legal and technical review process anyway? Could it be that government playing “venture capitalists” is a very bad, indeed ruinous idea? Could it be that the 72% of the Obama stimulus was aimed at Obama cronies and Obama campaign supporters without regard to ethics or financial reality?
Of course you’ve probably heard that Energy Secretary Steven Chu made a public commitment to “speed up the approval process” of green-tech applications for federal loans and subsidies. How wonderful!
Bottom line: Solyndra disclosed the “going concern” warning by PricewaterhouseCoopers, its accounting firm, in a Securities and Exchange Commission filing on March 16, 2010. So it’s quite possible that Solyndra’s execs up until the time they told Rep. Waxman that everything was going great, etc. were dealing an honest hand . . . which makes the Obama administration criminally negligent with the taxpayer’s money. The warning read:
“The company has suffered recurring losses from operations, negative cash flows since inception and has a net stockholders’ deficit,”
In June 2010, the month after the President Obama visit mentioned above, Solyndra executives withdrew their planned $300 million IPO. Solyndra’s business model was based upon a supposedly strong competitive advantage employing thinner panels that could be used on virtually any roof and because they used less of the expensive silicone it was felt that the cost of their more expensive technology could be somewhat balanced by the lower cost of resources. Silicone prices have fallen recently and fell another 30% in the last year evaporating any hope of the company ever becoming competitive in the marketplace. Problems and temporary solutions for Solyndra kept taxpayer money slipping down a rat-hole after that.
In February of this year House Republicans began investigating Solyndra’s loan-guarantee program and sent a letter to Energy Secretary Chu announcing their actions. The investigations so far point to crony-capitalism and a surprising new twist: socialist venture capitalism as the Obama administration sought to pick the winners and losers in the marketplace with foolish infusions of money into failing concerns in favored industries. The Republican investigations showed that Obama campaign fundraiser George Kaiser’s foundation (George Kaiser Family Foundation based in Tulsa, OK) owns 37% of Solyndra. Mr. Kaiser made 16 visits to the White House since 2009 according to visitor logs.
Besides the statements allegedly made to Rep. Waxman that Solyndra “was in a strong financial position” a July 13 letter from Solyndra to the Energy Committee said revenue had increased to $140 million from just $6 million in 2008 and was projected to almost double in 2012. Could it be that the Energy department doesn’t understand that if you’re selling more product but losing money on each sale . . . that doesn’t mean too much. The idea is to make a GASP “profit.” Yes, yes, we know that’s considered an ugly word in the liberal, progressive and socialist lexicon . . . but such are the facts of life.
Ya’all live long, strong and ornery,
** Rajjpuut strongly suspects that the good congressman may be throwing Solyndra’s execs under the infamous bus. Mr. Waxman is purportedly part of the gang that was pushing so hard for Solyndra to get the federal dough. It’s also possible he’s merely stupid. An awful lot of people do NOT actually listen too well . . . instead they tend to hear either what they fear; or what they want to hear. Being told revenues have gone up 23 times in three years and that revenues would almost double again in 2012 . . . is clearly NOT the same as being told that PROFITS have gone up 23 times and would almost double . . . sad but true but politicos seldom can be expected to sympathize with nor understand business jargon. So, Friend, what questions would you have asked here? Perhaps something silly like, “Wow, that sounds impressive, so how much money are you guys making? Perhaps the progressive politicians being in “over-their-heads” when dealing with business explains why it’s been 900 days since the Democratically-controlled Senate passed a budget? Or why the Democratically-controlled House of Representatives didn’t pass a 2011 budget? It could explain a lot. The fact is that despite Hollywood's eternal enthrallment with "lovable losers," in politics as in the rest of life: incompetence (unlike absence) does NOT make the heart grow fonder.