Akeena Lit Up on Chinese Distribution Partner Deal
By Brett Bumeter - 04.01.2008
Akeena Solar picked up a huge boost in the markets after they announced a distribution licensing deal for products to be distributed and sold outside of the United States, specifically in Europe, Japan and Australia.
Akeena Solar (nasdaq: AKNS – news - people ) soared 43.8%, or $3.49, to close at $11.45 after the solar power systems designer announced it penned a licensing agreement Suntech Power (nyse: STP – news - people ) to distribute its Andalay home solar panel system in Europe, Japan and Australia.
Akeena Solar Lights Up – Forbes.com
The market boost will definitely grease some wheels and doors for Akeena, but managing a multi-continent licensing deal with a Chinese distribution partner has proven complicated for many larger companies. The stocks seemed to trade on the news of the expansion of the business, but in the next 12 – 18 months the reality of the deal will set in as tracking the complexities of a licensing deal will start to weigh in through various channels.
The risks of this type of arrangement are many.
- Akeena will have to work harder to protect their intellectual property.
- Akeena will have to take more precautions to prevent knock off products from being manufactured and distributed within the same international channels.
- Then Akeena will have to put solid auditors on the licensing agreement to insure the agreement is being adhered to and the numbers counted correctly
- One of the most difficult aspects of all, will be managing the US channel with International channels getting lit up by a Licensing partner. All too often licensing companies and their own customers will see their products sold out of channel. Akeena could very well see product sold under a Europe or China license end up in markets in the US, possibly at prices and rates lower than what Akeena is selling products for in the US. This type of thing happens in low end products from car spoiler accessories and cell phones all the way up to custom home theater systems and it could happen with Akeena products as well.
In Summary, this is the mark of a good opportunity for growth for Akeena, but that opportunity will definitely be complicated by the ugly reality of Licensee management.
