Intel Solar: Start-Up & Spin-Off (INTC, GS)

Just when you thought alternative energy and solar couldn’t get hyped any more by any new players, well guess again.  Intel Corp. (NASDAQ: INTC) announced it is spinning off key assets of a start-up business effort inside the company’s "New Business Initiatives" group to form an independent company called SpectraWatt Inc.

Intel Capital is also leading a $50 million investment round in SpectraWatt, with investments from others such as Cogentrix Energy, LLC, a wholly owned subsidiary of The Goldman Sachs Group, Inc. (NYSE: GS), PCG Clean Energy and Technology Fund, and Solon AG. The transaction is expected to close in the second quarter of 2008.

SpectraWatt will manufacture and supply photovoltaic cells to solar module makers. In addition to focusing on advanced solar cell technologies, SpectraWatt will concentrate development efforts on improvements in current manufacturing processes and capabilities to reduce the cost of photovoltaic energy generation.

The company is still in the concept stage without facilities.  It expects to break ground on its manufacturing and advanced technology development facility in Oregon in the second half of 2008 with first product shipments expected by mid-2009.

This won’t be adding anything down to Intel’s bottom line numbers for quite some time.  Even if Intel was the full $50 million and realized a 100-bagger it would still be $5 Billion down the road, and that compares to a $121 Billion market cap today.

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Jon C. Ogg
June 16, 2008