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Company News

UPDATE 3-SunPower probing accounting errors, stock drops

* SunPower probes books after review of Philippine ops

* May have to restate past three quarters, 2008

* Shares drop after-hours (Adds analyst comment, updates share movement)

SAN FRANCISCO, Nov 16 (Reuters) - SunPower Corp SPWRA.O is investigating millions of dollars in accounting mistakes over the past three quarters, the U.S. solar module maker said on Monday, sending its stock down as much as 8 percent.

The Silicon Valley-based company said its audit committee had started an investigation after an internal review of its Philippine manufacturing operations found that there may have been unsubstantiated accounting entries.

U.S. companies across an array of industries have reported accounting problems in recent weeks, in a sign that the pressures of doing business in a recession are taking a toll on bookkeeping. [ID:nN28329348] [ID:nN14307036]

The SunPower audit committee’s preliminary findings were $1 million of overstated expenses in the first-quarter costs of goods sold, along with understated expenses in costs of goods sold of $14 million in the second quarter and $2 million in the third quarter.

The company said it is looking at the impact of potential adjustments to 2009 results on the previous fiscal year, and estimates about $9 million of the identified accounting entries should have been made in 2008.

Whether restatements of the 2009 interim reports and 2008 annual report will be necessary has not yet been determined.

“Until the investigation is complete and such a determination is made, there can be no assurance that broader issues do not exist,” SunPower said in a statement.

The company had third-quarter revenue of $466 million, more than double its first-quarter total, while it moved from a first-quarter loss of $2.5 million to a $34.6 million third-quarter profit. Operating income in 2008 was $167.5 million, on revenue of $1.43 billion.

Simmons and Co analyst Burt Chao said that SunPower has had increasingly complex accounting as the solar company has expanded.

“This shows the difficulty of having complex accounting and having a global footprint ... As the solar companies become more mature and more complex and have to diversify, accounting will be an increasingly important part of investing in the solar industry,” Chao said.

Shares of the San Jose, California-based company fell as much as 8.2 percent in after-hours trading, and were last changing hands at $25.52, down 6.3 percent. (Reporting by Braden Reddall and Laura Isensee; Editing Bernard Orr)

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