Real Goods Solar In The Shade (RSOL, GAIA)

Real Goods Solar (NASDAQ:RSOL) came public in May at $10.00 per share (at the bottom of the $10 to $12 range) yet its trading high is only $9.25 this year.  It has been dropping ever since. It closed yesterday at $4.37, only a dollar above its all-time low. But lack of support for its share price hasn’t stopped Real Goods from acquiring more assets.

Yesterday, Real Goods announced its fourth acquisition in less than 12months. It merged with a small private company named Regrid Power for less than $15 million, spending about one-third the purchaseprice in cash and the rest in stock. There’s also an earn-outprovision, but no details were given.

In the announcement, Real Goods noted that Regrid’s founder and CEO,Tom McCalmont, will become the Real Goods CEO within the next twomonths. The founder and current CEO of Real Goods, John Shaeffer, willbecome President. Now it’s not unheard of for one company to buyanother in order to capture management or technical talent. But in thiscase, swapping the CEO of one small company for another doesn’t seemlike a particularly innovative move. If Real Goods wants to grow, itshould probably have gone after a bigger fish. There will be plentyavailable real soon now.

Gaiam Inc. (NASDAQ: GAIA) is the parent which spun Real Goods Solar outas a new company.  Its shares are also a back off of the 52-week lowsand shares are down considerably more than their high.

Gaiam is a lifestyle company promoting its media and apparel for yogaand other healthy lifestyle choices.  Its customers are more likely tobe interested in solar power than many other customers, but this was astrange combination from the start.

Paul Ausick
October 16, 2008