Solyndra Successful and Innovative?

NEW YORK (TheStreet) -- Context is key to any discussion about failed solar energy company Solyndra.

Mitt Romney's campaign was quick to slam President Barack Obama's team Wednesday for a claim that Solyndra was once considered a successful and innovative business.

"There was nothing 'innovative' about giving political payoffs to campaign donors. There was nothing 'successful' about 1,800 workers losing their jobs or taxpayers losing hundreds of millions of dollars," Ryan Williams, a Romney spokesman, said Wednesday in a statement.

Williams was referencing the comment from an Obama spokeswoman, who told The Detroit News that Solyndra was widely praised before and after it received a $535 million loan guarantee from the Department of Energy.

"In fact, both Republican and Democratic administrations advanced Solyndra's application, and the company was widely praised as successful and innovative both before and after receiving the Department of Energy loan guarantee," Lis Smith, an Obama spokeswoman told The Detroit News.

Romney has used Solyndra as a key criticism of the president, and has pointed to its failure as a case of cronyism -- George Kaiser, a top Obama bundler, was a primary venture capital investor in the company.

Several Capitol Hill investigations have failed to turn up any "smoking gun" of cronyism in the Solyndra loan process.

References to success may be a matter of semantics when it comes to Solyndra. The solar cell manufacturer never managed to turn a profit, however, it is typical of early stage companies operating at low production levels in new technology sectors to generate negative gross margins for the first several years as production is scaled. However, the Obama spokeswoman's comment about the company's success obscures the fact that Obama's Department of Energy continued to lend to Solyndra during a period of time when it was clear the company's viability was uncertain.

In fact, the primary rational for the last round of funding providing by the government to Solyndra was that if it ever came to a bankruptcy, the government would in theory be able to recoup more of its loan if Solyndra's facilities were built out to full scale, as opposed to trying to auction off a half-built, bankrupt operation. This venture capital theory -- supported by outside advisers to the Department of Energy -- has not proven to be relevant to the Solyndra bankruptcy process, which has failed to uncover any buyers willing to pay up for the company's manufacturing facilities.