These Solar Companies Take a Dive After Earnings
Shares of First Solar (NASDAQ:FSLR) are down over 9 percent in afternoon trading on Friday. The American solar manufacturer is suffering from general negativity in the solar industry, compounded by a third-quarter revenue miss.
Revenue for the quarter fell 17 percent year-over-year to $839.1 million, missing expectations by $127 million. Earnings per share dropped to $1 when fully diluted, including a charge of $0.27 per share for restructuring charges. EPS for the quarter in 2011 was $2.25.
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Following a general downward trend in demand for solar panels, particularly heading into the fourth quarter, the company revised its full-year 2012 net sales guidance from between $3.6 billion and $3.9 billion to between $3.5 and $3.8 billion. First Solar also cited “weather-related disruptions in our supply chain and at certain project sites, which may push the expected closing of the project sales from Q4 2012 into Q1 2013.”
The company issued GAAP guidance on 2012 earnings per share in the range of -$1.30 to -$1.60.
“Despite continued uncertainties and over-supply conditions in the market, First Solar delivered another strong quarterly performance,” said CEO Jim Hughes. “Our quarterly performance coupled with our recent project wins in sustainable markets demonstrates we are making meaningful progress in achieving our strategic plan for long-term growth and value creation.”
Wall Street clearly doesn’t seem to share Mr. Hughes’ confidence. However, First Solar did announce a number of large projects in October, and shares had climbed over 8 percent in the month. Despite what is widely agreed to be an unhealthy market, the company should be seeing some relief from anti-dumping and countervailing tariffs levied against Chinese solar panel imports.
Also on the bright side, capacity utilization rose from 63 percent to 83 percent. In the company’s earnings call, CFO Mark Widmar noted that cost per watt for the quarter fell $0.05 to $0.67
American industry partner SunPower (NASDAQ:SPWR) also posted its third-quarter earnings after the bell on Thursday, and is worse for the wear. Shares are down over 7 percent in the afternoon despite EPS of $0.03 beating estimates by $0.14, and revenue growing 7.9 percent to $649 million, beating by estimates by $57 million.
In the earnings release, CEO Tom Werner points out that SunPower saw growth despite “difficult industry conditions.” SunPower also announced a slew of new projects in the quarter, but lost share value in October. The company is up just over 8 percent for the last three months ending October 31.
The company issued fourth-quarter guidance of -$0.75 to -$1.00 per diluted share.
Shares of Chinese solar industry participants have not wobbled outside of expectations on the news. Suntech Power Holdings (NYSE:STP) rose as high as 2.7 percent in the afternoon, while Trina Solar (NYSE:TSL) dropped as much as 2.2 percent.
On Thursday, China’s commerce ministry announced that it would launch its own investigation into solar imports and exports. The move is seen by many as retaliation for America’s tariffs and comes as the European Union considers its own solar panel duties. Chinese solar manufacturers have taken a lot of blame for the over-supply of panels in the market. Bankrupt companies like Solyndra have gone as far as filing lawsuits claiming conspiracy.
For its part, China has raised its capacity utilization from a low around 20 percent to about 50 percent. The country’s solar industry is in for deep workforce cuts before it is likely to recover.
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