November 17, 2009 / 5:54 PM / 8 years ago

UPDATE 1-SunPower shares tumble after accounting errors

2 Min Read

* Shares slide after accounting errors discovered

* Analysts cut recommendations on shares

(Adds analyst comments, updates share movement)

NEW YORK, Nov 17 (Reuters) - The shares of solar power company SunPower Corp SPWRA.O tumbled more than 18 percent on Tuesday after the company said it was investigating millions of dollars in accounting errors.

The company announced on Monday that its audit committee had launched the probe after an internal review found its Philippine operations had overstated expenses and understated costs. [ID:nN16522308]

It was not yet clear if the company would need to restate its 2009 quarterly reports or its 2008 annual report.

Analysts at Raymond James, FBR and Caris cut their recommendations on SunPower stock Tuesday morning.

"Any whiff of accounting impropriety is going to be looked at extremely negatively by the market," Raymond James analyst Pavel Molchanov said in an interview.

He noted the figure for the errors -- $15 million -- was not a huge number "in the grand scheme of things" and the news does not change SunPower's fundamental business or contracts.

"We're not going to jump to any conclusions, but the market has never been skittish about jumping to conclusions ... Until the company can explain what the underlying problem is -- what the cause is, who's responsible -- there will be an overhang on the stock. That's the basis of our downgrade," Molchanov said.

FBR Capital Markets analyst Mehdi Hosseini said in a note to clients that the accounting errors add "an additional layer of uncertainties" about the company's cost structure.

Hosseini cut his price target for SunPower's shares to $30 each from $38.

SunPower shares were down 18.2 percent at $22.28 in midday trading on Nasdaq after hitting $22.97 earlier in the session. (Reporting by Matt Daily and Laura Isensee in Los Angeles, editing by Dave Zimmerman and Andre Grenon)

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