Arise Technologies ends losing streak

After being beleaguered by losses for years, shareholders of Waterloo based solar manufacturer Arise Technologies (TSX:APV) woke up to something different today; a profit.

For Q1, 2010 Arise reported that it had earned $2.43-million. The catch? Sales were down, from $16.2-million in first-quarter 2010 to $10.9-million. The largest reason for the profit was the amendment of an existing silicon wafer contract. Arise had previously written down an impairment charge of more than (US) $9 million on the contract.

Owing to the large hit in the topline, most of the verbiage of Arise’s press release today was not so sunny. The company cited lagging prices for photovoltaic cells, changes to European feed-in tariff programs, and unusually bad weather conditions in Europe. One bright spot for investors is that Arise is no longer burning cash at its previous rate, which was almost certainly unsustainable. After losing $17.3 million in 2010, the company decreased operating expenses in Q1 by 14.2 per cent to to $3.6-million. Management said the decrease was mainly the result of a reduction in research and development expenses.

It has not been a pretty three years for shareholders of Arise. Coinciding with the opening of its first photovoltaic cells plant in Bischofswerda, Germany, shares of the company raced to to $2.53 on April 11th of 2008. But, perhaps without even knowing it, Arise began playing a dangerous game of musical chairs that year. When the music stopped, in the form of a global recession and an increasingly out of favor sector, the company was still hemorrhaging cash. The losses meant Arise had to go back to market to raise money, a prospect that was increasingly dilutive. By the time 2010 ended the company had more than 250 million shares outstanding, and a share price of just $.165 cents.

Those still bullish on Arise might point to recent changes at the top. Q1 2011 was the second full quarter for new CEO Dan Shea, who spent 27 years at IBM spinoff Celestica, and a short time at Research in Motion. From a profit and loss perspective, the pair of quarters Arise has reported under Shea have been a marked improvement. Q4 2010’s gross loss was $1.1-million compared with $4.7-million in the fourth quarter of 2009.

At press time, shares of Arise were up 15%, to $.115 cents.