* Slashing production to 25 MW for the fiscal Q3
* Had previously forecast production of 27-33 MW
* Projects in France, Italy being put on hold
* Delays could impact 50 pct of quarterly revenue
(Adds analyst comment, byline; updates share activity)
By Nichola Groom
LOS ANGELES, March 10 U.S. solar company Energy
Conversion Devices ENER.O said it was slashing production for
the current quarter because cutbacks in French and Italian
solar subsidies have put projects there on hold.
The company's shares slid more than 22 percent in extended
trade following Thursday's announcement. It said the stalled
projects could impact as much as half of its expected revenue
for the fiscal third quarter.
The Auburn Hills, Michigan-based company is cutting
production of solar products to 25 megawatts for the quarter
ending March 31. Last month, it had forecast third-quarter
production of 27 MW to 33 MW.
The news came hours after solar company Canadian Solar Inc
(CSIQ.O) said some Italian customers were seeking to postpone
orders, sending shares of solar panel makers plummeting.
Energy Conversion's stock lost 7.6 percent to close at
$3.16 on the Nasdaq, and slid to $2.45 after hours. As of
Thursday's close, the stock was down 64 percent from its
52-week high of $8.73 reached in March.
Like many solar companies, Energy Conversion Devices has
been plagued by investor concerns about cutbacks in incentives
for solar power in top European markets including Italy, France
"The dramatic and abrupt shift in the French and Italian
solar incentive structures has impacted our business and forced
us to reconsider our near-term financial outlook," Chief
Executive Mark Morelli said in a statement.
Morelli added that France and Italy were two of his
company's key markets, and that its outlook would be more
certain after governments in those nations implemented new
subsidy regimes later this year.
But one analyst said it was unclear exactly when the
markets would recover.
"No banks are going to finance projects when you don't know
what the cash flows are," Wedbush analyst Christine Hersey
said. "They don't even know how long this reduced production
level may last."
Hersey has an "underperform" rating on Energy Conversion
Devices shares. She added that Energy Conversion Devices was in
a unique position because it was very dependent on the French
and Italian markets.
Rival solar companies will seek to redirect volumes to
other markets where they have a strong presence, such as
Germany, she said.
Meanwhile, Energy Conversion Devices will take charges for
restructuring and factory under-utilization, Morelli said.
Energy Conversion Devices has also been hurt by concerns
that its thin film silicon technology will not be able to
compete with other solar technologies long term.
The company makes lightweight, flexible solar laminates for
rooftops and buildings, and its products are less efficient at
converting sunlight into electricity than rival solar
(Reporting by Nichola Groom; editing by Richard Chang and