February 6, 2009 / 12:47 AM / 9 years ago

UPDATE 3-Evergreen Solar results disappoint, shares fall

 * Evergreen loss before items falls short of estimates
 * Revenue falls short of company and analysts' forecasts
 * Company sees weak solar demand in first half of '09
 * In talks to subcontract manufacturing, cut capital costs
 * Shares fall 10 percent after-hours
 (Adds details throughout, CEO comments from conference call,
byline, updates share activity)
 By Nichola Groom
 LOS ANGELES, Feb 5 (Reuters) - Evergreen Solar Inc ESLR.O
on Thursday reported quarterly results that fell short of
expectations as prices on solar panels fell and it recorded
high costs for ramping up a new manufacturing facility, sending
shares down 10 percent in extended trade.
 Evergreen also warned that a global economic downturn and
weak credit markets would hurt demand for solar products in the
first half of this year and said it was seriously considering
subcontracting some manufacturing to save on capital costs.
 "We have a fair amount of confidence that we will come up
with something that makes a lot of sense, but we don't have a
deal yet," Chief Executive Richard Feldt said on a conference
call with analysts. "This is not a way of cheapening anything,
it's just a way of reducing costs."
 Subcontracting manufacturing of solar cells and panels
would reduce the company's capital needs for its next factory,
planned for Asia, by about 75 percent, Evergreen said.
 "They are trying to make some hard calls here, in terms of
scaling the business, that are a little bit more reflective of
reality," Wedbush Morgan analyst Al Kaschalk said. "But let's
face it, though. The credibility is still not there that there
is a legitimate business model that is going to ultimately work
as a stand-alone company."
 Evergreen, based in Marlboro, Massachusetts, makes
photovoltaic solar equipment that turns sunlight into
electricity. The company expects to sell about 130 megawatts of
solar products this year, it said.
 PRICES DROPPING
 Strong demand for clean solar power was a bright spot in an
otherwise dour U.S. economy for much of last year. At the end
of 2008, however, frozen credit markets stalled financing for
solar projects, causing shares of solar companies to plummet
and raising worries that the industry's annual growth rate of
50 percent would falter this year.
 A pullback in government solar subsidies in Germany and
Spain and a strengthening U.S. dollar against the euro has also
caused prices on solar panels to fall faster than expected,
crimping profit margins for many manufacturers.
 Evergreen forecast its average selling prices would be down
between 10 percent and 15 percent for the year; government
economic stimulus measures and a credit market recovery would
underpin U.S. demand for solar in the second half of the year.
 Evergreen's fourth-quarter net loss was $52.1 million, or
32 cents per share, compared with a profit of $788,000, or a
penny per share, a year ago.
 Results included charges of $23.1 million related to the
closure of Evergreen's pilot plant, $8 million for the
write-down of certain equipment and $9.7 million in costs for
starting up facilities in Massachusetts and Michigan.
 Excluding the pilot plant charge and equipment write-down,
Evergreen posted a loss of 13 cents a share, according to
Reuters Estimates. On that basis, analysts had been expecting a
loss of 11 cents a share.
 Earlier this month, Evergreen said it had closed its
Marlboro, Massachusetts, pilot plant to cut costs while it
ramped up its new Devens, Massachusetts facility.
 Fourth-quarter revenue nearly doubled to $44.2 million, but
fell short of analysts' average estimate of $46.6 million,
according to Reuters Estimates.
 In October, Evergreen forecast fourth-quarter revenue of
$45 million to $55 million and gross margin of 5 to 10
percent.
 Fourth-quarter gross margin was 4.6 percent, the company
said, blaming lower selling prices on solar panels and higher
costs related to manufacturing efficiencies during the start-up
of its Devens plant.
 Evergreen shares fell to $1.99 in after-hours trade after
closing at $2.22 on the Nasdaq.
 (Reporting by Nichola Groom, editing by Matthew Lewis)


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