I have been thinking about the statements made by Peng with regards to having 1.2GW capacity and having orders amounting to 1.8GW. How do you solve the issue? Options are:
1) Expand to the original planned 2.3GW with new brick and mortar.
2) Mergers and Aquisitions.

Either choice calls for cash, so which one is the better choice?

I think that based on the current fears of slowdown (by analysts), that any further expansions with new brick and mortar will draw negative opinions as it could be taken as future idle plant capacity and further aiding excess market supply. With that said, I have a strong feeling Peng will most likely buy one or more of the weaker players and begin consolidating the sector.

The current market cap of some of these other solar companies are so cheap that consolidation should be a very real probability.

If LDK is capable of generation roughly $100M per month in profits today, further expansion or mergers is a must in the coming months as they must satisfy their backlog/bookings or they will face severe financial penalties for failure to deliver wafers. Having almost $1.0Billion in cash and generating $100M more monthly says thay they have flexibility in what course of action to take in the near term.

These guys have a very interesting issue to face and resolve. While other industries are facing dropping demand, LDK is facing growing demand..... hmmmm.

Just think about it and make (continue to make) your investing decisions.

CPA