Hoku Scientific Earnings: Not Really About Earnings (HOKU)

Hoku Scientific, Inc. (NASDAQ:HOKU) has been a stellar company since its stock has tripled over the last 75 days or so.  The company is set to report earnings next Tuesday, July 24, 2007, but investors will want to look past the earnings as far as "EPS and Revenues" are concerned.  No one expects a profit and the revenues expected are just a  tad over $1 million.  The truth going one step further is that the actual numbers shouldn’t matter compared to the "long term plan and progress expected" in 2009 and beyond.  This one has been public for just under two-years, and this latest run took it briefly back to its all time highs.

Investors and traders will want to monitor the company’s long-term outlook for its Idaho facory, potential financings, cash requirements, AND the ‘total market opportunity’ it thinks it can capture for its photovoltaic modules from 2009 and beyond.  In other words, this is not a present earnings story and it isn’t even really a forward 2008 story.  This is a story of what the company can do in 2010 and beyond, since the factory being constructed is not scheduled to be completed until 2009 and is set to produce roughly 3,000 metric tons of polysilicon for use in solar panels.

We recently ran a "Both Sides of the Coin" piece on Hoku, and everything is still somewhat the same.  You can parcel through that to give a better historical background, but the overall timing, financing, and trends for their facility completion and the subsequent ability to deliver on later contracts will be the important part to focus on.  This company is still more of a long-term implied call option on solar power and alternative energy rather than an operating company at this point.  With the recent run and the flurry of trading volume, this will definitely be one to watch.

Jon C. Ogg
July 20, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.