SunPower warning sends solar stocks tumbling

LOS ANGELES (Reuters) - Shares of solar power companies slumped on Wednesday, a day after SunPower Corp (SPWRA.O) warned that recent gains in the U.S. dollar would hurt earnings growth in the fourth quarter and next year.

The announcement was likely to be the first of many in the fast-growing solar industry, analysts said.

"SunPower is not alone, but is early with its update," Oppenheimer analyst Sam Dubinsky said in a client note. "Most industry peers have yet to report earnings, though will likely issue guidance that points to similar headwinds."

Chinese solar companies Suntech Power Holdings Co Ltd (STP.N), JA Solar Holdings Co Ltd (JASO.O), Trina Solar Ltd (TSL.N) and LDK Solar Co Ltd (LDK.N) are all scheduled to report earnings later this month, and their shares were down sharply on Wednesday.

Solar companies are vulnerable to fluctuations in the dollar-euro rate since Germany and Spain are two of the largest markets for the renewable energy source. Other European markets, including Italy and Greece, are also growing rapidly.

SunPower's announcement sent solar stocks tumbling across the board, erasing some of the double-digit gains the industry enjoyed in the run-up to the U.S. presidential election. Investors had been buying up solar stocks on the expectation that a victory by Sen. Barack Obama would be positive for the alternative energy industry.

On Wednesday, however, the day after the election, SunPower shares were down $11.89, or 24 percent, at $38.61. As of Tuesday's close, the stock had been up 72 percent from its 52-week low of $29.33 hit just a week earlier.

Late on Tuesday, San Jose, California-based SunPower said the rebound in the dollar against the euro would cut its fourth-quarter revenue by $17 million and earnings per share by about 15 cents.

For 2009, the euro's fall will hurt revenue by $50 million and earnings per share by 50 cents.

"They are underhedged on the euro," said Merriman Curhan Ford analyst Brion Tanous. "It's very surprising. This is one of the best management teams on the street."

Excluding the foreign exchange adjustments, SunPower said its outlook for the fourth quarter and 2009 was unchanged. It also said it had adjusted its hedging positions to limit the impact of currency fluctuations on its net income.

Other big losers on Wednesday included China's Suntech (STP.N), which was down $3.12, or 15 percent, at $17.11, and U.S. thin film maker First Solar Inc (FSLR.O), which slid $18.50, or 10 percent, to $159.02.

(Reporting by Nichola Groom and Matt Daily; editing by Gunna Dickson)