GT Solar results, MEMC deal cheer investors

LOS ANGELES Wed Aug 3, 2011 6:31pm EDT

LOS ANGELES (Reuters) - Solar investors on Wednesday cheered better-than-expected results from equipment maker GT Solar International Inc and MEMC Electronic Materials Inc's newest purchase of a solar project developer, sending both stocks up in extended trade.

GT Solar, the world's third biggest maker of the machines used to make photovoltaic equipment, said its backlog rose to a record $2.3 billion, sending its shares up more than 5 percent. The company has booked a string of contract wins this year, thanks in part to its entry into the LED business through the acquisition last year of sapphire maker Crystal Systems.

Aggressive expansions of photovoltaic manufacturing capacity in 2010 and 2011 have been a boon to GT Solar and rivals including Applied Materials Inc and Germany's Centrotherm. But that rapid expansion has led to an oversupply of solar products in the market, sending prices down and squeezing sellers of those solar products, such as MEMC.

"GT is playing into the volume growth in both the LED and solar segments," said Ardour Capital analyst Adam Krop, who has a "buy" rating on both MEMC and GT Solar shares. "MEMC is more directly influenced by what is happening in the pricing of solar components."

Solar wafer maker MEMC lowered its revenue and earnings outlooks for the year due to the weak solar market and a 40 percent decline in solar wafer pricing during the quarter.

MEMC's primary business supplies silicon wafers for the solar and semiconductor industries. But the company has also branched out into solar project development through its 2009 acquisition of SunEdison, and its shares rose slightly in extended trade after it announced another such deal to buy the U.S. arm of Fotowatio Renewable Ventures.

"The after market looks pretty good on MEMC, and that's largely due to their acquisition and their ability to grow their downstream pipeline," Krop said.

The company will pay $112 million plus repayment of about $22.9 million in intercompany loans and capital contributions. The deal includes a deferred payment of up to $103.6 million should Fotowatio U.S. achieves certain performance targets.

MEMC's second-quarter net income rose to $47.3 million, or 21 cents per share, from $13.8 million, or 6 cents per share, in the same period last year.

Excluding one-time items, the company earned 29 cents per share.

Revenue climbed 66 percent to $745.6 million. The company said the revenue included a $149.4 million payout related to the termination of a supply contract with Suntech Power Holdings Co Ltd.

The deal ended last month because plunging silicon prices made it unattractive.

For the full year, MEMC lowered its adjusted revenue outlook to $3.3 billion to $3.6 billion from a prior view of $3.4 billion to $3.7 billion. The company cut its earnings per share view to between 80 cents and $1 from a forecast of $1.00 to $1.30.

GT Solar, meanwhile, reported net income for the fiscal first-quarter ended July 2 of $52.1 million, or 41 cents per share, compared with $16.5 million, or 11 cents per share, a year ago.

Wall Street analysts, on average, had been expecting earnings of 31 cents per share, according to Thomson Reuters I/B/E/S.

Revenue rose 71 percent to $231.1 million. Analysts had been expecting revenue of $225.98 million, according to Thomson Reuters I/B/E/S.

GT Solar, which has booked a string of contract wins this year, said its backlog at the end of the quarter was $2.3 billion.

Merrimack, New Hampshire-based GT Solar also backed its fiscal 2012 revenue outlook of $1 billion to $1.1 billion and earnings view of $1.55 to $1.85 per share.

The company raised its gross margin view to between 43 percent and 45 percent from a prior view of 42 percent to 44 percent.

GT Solar shares rose to $13.84 in extended trade after closing at $13.06 on the Nasdaq. The stock has gained over 45 percent this year.

MEMC shares, meanwhile, rose 1.7 percent to $7.11 after closing at $6.99.

(Additional reporting by Matt Daily in New York; Editing by Robert MacMillan, Bernard Orr)

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