Real Goods nets $55 million in IPO

Real Goods Solar, the Mendocino County green energy pioneer, received a rude welcome Thursday when it returned to Wall Street after an eight-year absence.

Investors sent Real Goods' shares dropping 12 percent Thursday following the Hopland solar energy company's initial public offering.

Despite the response, the company still walked away with $55 million from the IPO, which will fund its plans to boost sales and acquire competitors in the fragmented solar industry.

"It's certainly a big step in the history of the company," said Eric Zech, president and chief financial officer.

Real Goods sold 5.5 million shares at $10 a share in the IPO. The stock opened at $9 a share Thursday and fell as low as $8.05 in midday trading. It closed at $8.80 on the Nasdaq market, where it is listed under the symbol "RSOL."

Expanding sales of solar systems in California, in part through purchasing competing companies, is an immediate aim, Zech said.

Real Goods Solar also looks to move beyond its base in California and Colorado, he said.

"A big component of our strategy is going to be finding other established players out there," Zech said.

The IPO returned Real Goods to Wall Street, where its stock traded for nine years before it was acquired by Gaiam, a Broomfield, Colo., company that produces DVDs, CDs, books and catalogs on lifestyles and healthy living. Gaiam still owns nearly two-thirds of Real Goods Solar stock.

Thursday's IPO was the first for a North Coast company since a Petaluma biotech company, Oculus Innovative Sciences, opened on the Nasdaq in January 2007.

Founded in 1978 by John Schaeffer, Real Goods Solar designs, purchases and installs solar energy systems for homes and small businesses. Schaeffer remains chief executive officer of the company, which employs 83 people.

Real Goods Solar has installed more than 2,400 residential and small commercial solar energy systems and sold a variety of solar products to more than 30,000 customers.

The solar market has heated up in recent years, particularly in California where the state began offering $3 billion in subsidies last year to put solar electric systems on a million rooftops over the next decade.

Real Goods and other larger firms are expanding in the state by purchasing smaller companies or opening multiple offices.

A combination of rising energy demand and the prospect for higher electricity rates is leading a growing number of homeowners and businesses to go solar.

"People are making a smart investment decision with their money," Zech said. "More and more solar energy systems are popping up, especially with oil prices so high. People are very focused on renewable energy."

Real Goods Solar plans to expand into new markets where competitors have little brand recognition and target other states with financial incentives for installing solar, according to the company's filings with the U.S. Securities and Exchange Commission.

The company also could continue acquiring competing businesses, according to its filings.

Potential hurdles to those plans include the high cost of installing solar energy systems, as well as rising prices for silicon due to a global shortage of the basic material for solar panels, according to the company's filings.

You can reach Staff Writer Michael Coit at 521-5470 or mike.coit@pressdemocrat.com.