November 3, 2011 / 9:26 PM / 6 years ago

WRAPUP 2-SunPower drums up savings, First Solar ices plant

* SunPower profits beat Wall St, but lowers forecasts

* SunPower’s lower 2011 view reflects industry woes

* First Solar puts Vietnam plant on hold

* SunPower shares slip, First Solar up

By Nichola Groom and Matt Daily

Nov 3 (Reuters) - U.S. solar companies SunPower Corp and First Solar Inc said on Thursday they will slash spending and drive down costs amid the steep drop in prices for their panels.

SunPower cut its sales and profit forecasts as it outlined a restructuring plan to trim operating costs by up to 10 percent in 2012, while First Solar said it would delay plans to build a new module factory in Vietnam.

Solar companies have struggled to stay profitable amid a drop of about 40 percent in the price of panels this year, and most companies expect that decline to continue into 2012.

A glut of production, largely from fast-growing Chinese companies, as well as cuts to subsidies in Germany and Italy combined to trigger that price drop, which has driven some solar makers into bankruptcy.

In the past week, solar power companies including First Solar, MEMC Electronic Materials Inc and Chinese panel maker Trina Solar have warned that difficult market conditions were hurting financial results.

SunPower said it expects the solar panel pricing environment to remain cutthroat through 2012, though perhaps less dramatic than this year.

“The same kind of percentage drops are very unlikely to continue through next year,” Werner said on a conference call with analysts. “However, stability and increase in prices is not what SunPower is planning on.”

Still, SunPower said it was seeing a pickup in demand across European markets such as Germany, where it now expects fourth quarter residential and commercial shipments to climb 70 percent from third-quarter levels.

SunPower, which is majority-owned by French oil giant Total , also announced the departure of two key executives: Chief Financial Officer Dennis Arriola will leave the company in March of 2012, while the head of its residential and commercial business, Jim Pape, is leaving this month.

Other executives will be taking on expanded roles that will break the company’s management structure down by region and enable faster decision-making, CEO Werner said.

Nevertheless, the company faces a challenging market for the next several quarters, analysts said.

“It’s going to be a terrible, terrible next few quarters for them,” said Stephen Simko analyst at Morningstar. “Investors need to be ready for continued losses well into 2012.”

Last week, First Solar slashed its profit and sales forecast for 2011 and ousted CEO Rob Gillette, raising fears that its position as the industry’s low-cost leader was under threat as the price of polysilicon-based panels falls.

Interim CEO Mike Ahearn, who had led the company before Gillette was brought in, said First Solar would accelerate its efforts make its thin-film cadmium telluride panels cost less to manufacture while raising their efficiency.

The company had spent too much money in markets where subsidies were declining, he said, and focused too much on quarterly earnings at the expense of long-term growth.

“Our emphasis needs right now to be on creating new markets,” he told a conference call.


Sunpower lowered its fiscal 2011 sales forecast to $2.4 billion to $2.5 billion, from $2.8 billion to $2.95 billion previously.

And it slashed its profit outlook. Sunpower now forecasts a loss of 5 cents a share to a profit of 20 cents a share in fiscal 2011, down from a previously forecast profit of 75 cents per share to $1.25 per share.

The company reported third-quarter revenue of $705.4 million, just below analysts’ average estimate of $712.57 million.

It racked up a net loss of $370.8 million of $3.77 a share, versus a profit of $20.1 million or 21 cents a share a year earlier. Excluding one-time items, it posted a profit of 16 cents a share, surpassing the average forecast for 6 cents according to Thomson Reuters I/B/E/S.

Sunpower’s stock climbed initially in post-market trading, but quickly sagged about 4 percent to $8.38 per share in extended trade, from an $8.76 regular-session close on the Nasdaq, while First Solar’s shares climbed 2 percent to $49.20.

Both companies’ shares have been battered in recent months, with First Solar down 63 percent since the start of the year, and SunPower dropping that same amount since Total’s purchase took effect in June.

Our Standards:The Thomson Reuters Trust Principles.
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