We recommend investors not to take any
position in Solazyme (SZYM) due to its continuous deteriorating profitability,
lack of product commercialization, operational inefficiencies and inability to
bring growth. Its business model of producing oil through transformation of
food, plants and animal fats is a matter of concern for investors. The
company's lack of SKUs in its skin care segment, limited distribution network
and heavy third party dependence will render its revenue contribution stagnant
going forward. Solazyme's financial problems, its inability to design a worthwhile
manufacturing facility, and the delay in regulatory approval for the sale of
microalgae would trouble the company further.
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