Why Solyndra Failed

An in-depth look at the demise of the solar panel company at the center of the White House-stimulus loan scandal

This is a rush transcript from "On the Record," September 16, 2011. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: Now to the scandal that has the Obama administration scrambling to try to explain, Solyndra. How does a company get $535 million and then suddenly go belly-up?

Joining us is Wall Street Journal contributor Yuliya Chernova. Yuliya, what happened? Why did Solyndra fail?

YULIYA CHERNOVA, WALL STREET JOURNAL: Well, it took all this money in and it spent it, and then it couldn't sell the product that it was making. It couldn't sell it at the price that it needed. So they just burned through all the money.

VAN SUSTEREN: In reading your article, though, I just cannot understand. It almost seems insane. I mean, I would never spend -- I would never invest one of my dollars in it because, for instance, it says in 2009, the true cost of the product they're -- the product they cost -- costs $4 to make it, and they -- and they were being sold on the market for $3.24.

CHERNOVA: Many companies, when they're young start-up companies, first are losing money with the expectation that the costs -- fixed costs will get amortized over time. But so that's the expectation that this company had, that the more of these panels they will produce, they will sell all of them, and then the cost for each one will be lower.

VAN SUSTEREN: But if you...

CHERNOVA: But they weren't able to do that.

VAN SUSTEREN: But even looking at your article, in 2009, Solyndra lost $172.5 million on revenue of over $100 million. I mean, wasn't that a tip-off, at least, that the company was failing and maybe no one should invest in it?

CHERNOVA: And the whole market at that point was already declining in terms of how much solar panels cost. Well, the price at which they sold, it was -- the price was falling. So even in 2009, there were companies that were holding back on expansion while Solyndra said that it will have to expand and the bigger the growth, the better.

VAN SUSTEREN: I thought one of the most stunning things from your article today is it said that its U.S. competition was a company called First Solar, Inc., and that that was a successful company. And I have yet to understand why (INAUDIBLE) why didn't we take our federal stimulus money and go to the successful business and expand it and create jobs? Why did we go to the loser? Because if you look at all the numbers that you lay out in your article, there is no good sign. This was one losing company right from the get-go.

CHERNOVA: Well, first of all, the government is backing First Solar's projects. But the idea behind this particular loan guarantee program was to invest in start-ups that have very innovative technologies that need money that they can't get from a standard bank, but that would take us forward and take the technology to commercialization.

VAN SUSTEREN: Which of course is a big -- it's a big sign if you can't get from it a standard bank, why -- you know, who's going to invest in it? That might have been a good tip-off for the government, but we missed that one. It's a great article. Yulia, thank you very much. Got to cut it short because of the tragedy out in Nevada.

CHERNOVA: Thank you.