Monday, May 10, 2010

SunPower Corporation (NASDAQ: SPWRA): Q1 Earnings Preview

SunPower Corporation (NASDAQ: SPWRA) is scheduled to release its first-quarter 2010 financial results after market close on Tuesday, May 11, 2009. Analysts, on average, expect the company to report earnings of 8 cents a share on revenue of $346.55 million. In the year ago period, the company posted earnings of 5 cents per share on revenue of $213.97 million.

SunPower Corporation, together with its subsidiaries, designs, manufactures, and markets solar electric power technologies. The company operates in two segments, Components and Systems.
In the preceding fourth quarter, the San Jose, California-based company reported that its net income totaled $8.7 million or $0.09 per share, compared to $28.5 million or $0.33 per share in the prior year quarter. Excluding charges, earnings were $0.47 per share, compared to $0.66 per share in the year-ago quarter. Revenue for the fourth quarter increased to $548 million from $398 million in the fourth quarter of 2008. Analysts, on average, expected the company to report earnings of $0.49 per share on revenue of $490.92 million for the quarter.

For first quarter 2010, the company expects to report breakeven per share including charges, and $0.05 per share excluding charges. The company expects revenue of $330 million to $350 million for the first quarter.

For fiscal 2010, the company expects, including charges, earnings of $0.05 to $0.35 per share, and excluding charges, earnings of $1.25 to $1.65 per share. Revenue estimates for fiscal 2010 is from $2.00 billion to $2.25 billion. Analysts currently estimate earnings of $1.43 per share on revenue of $2.08 billion for the year.

The company recently released unveiled its new E19 Series solar panels, a product lineup that offers an efficiency of 19.5 percent or greater.

Last month, the solar panel maker announced that it will begin manufacturing solar panels in Silicon Valley by the end of the year in conjunction with contract manufacturer Flextronics. The partnership is expected to produce 75 megawatts of solar panels per year, the companies said at an event in Milpitas, California to mark the announcement.

The solar industry has undergone significant changes in the past few years. The industry suffered heavily during recession as turmoil in the credit market forced financial players to abandon U.S. solar energy projects. The 2008 collapse of top solar financier Lehman Brothers and the freeze-up in the global credit markets drove nearly all banks to halt funding for major new solar projects, forcing the makers of systems that turn sunlight into electricity to cut prices for their products and sending their stocks crashing. The problems of solar companies had been further compounded by an oversupply of polysilicon, a material used in solar panels. Moreover heightened competition from Chinese solar companies too has impacted the US solar industry.

Globally, solar industry depends upon government subsidies and incentives and support to remain competitive. However, recent developments suggest that subsidies will inevitably be reduced or phased out. In Germany, Solar subsidies for rooftop-installed solar power will see a one-off cut of 16 percent from July, while most open-field installations will be cut by 15 percent.Support for farmland solar systems is to be scrapped completely, according to media reports.

However, the industry as a whole is likely to benefit from growing attention to global warming, skyrocketing oil prices, cheap financing and technological advances. At the Copenhagen Summit held in December 2009, the five major polluters of the world agreed to take action to reduce CO2 aggressively, with $100B per year pledged to help developing nations adopt green energy technology to cut greenhouse gas. Meanwhile, the US, China, Brazil and India continue to invest heavily in wind and solar energy with China's $454B in the next 5 year period as the most aggressive one. As part of the stimulus bill signed last year, the federal government approved around $60 billion in loan guarantee authority and $30 billion in energy grants for renewable energy and transmission companies. Congress has also granted a 30% renewable-investment tax credit to help expand the development of alternative sources of energy. As of February this year, the industry had gotten Treasury grants worth $81 million. That grant program is scheduled to end Dec. 31. The industry is still hoping that Congress will approve further policies to aid solar.

In terms of stock performance, SunPower shares have lost 48 percent over the past year.

Full Disclosure: None.
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