Saturday, February 12, 2011

SunPower Corporation (NASDAQ: SPWRA): Q4 Earnings Preview 2010

SunPower Corporation (NASDAQ: SPWRA) is scheduled to release its fourth-quarter earnings after the closing bell on Thursday, February 17, 2011. Analysts, on average, expect the company to report earnings of $1.05 a share on revenue of $930.63 million. In the year ago period, the company posted earnings of 47 cents per share on revenue of $547.94 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 third quarter, the San Jose, California-based company's net income was $20.1 million, or 21 cents per share, from $19.5 million, or 20 cents per share in the prior-year quarter. On an adjusted basis, the company earned 26 cents per share in the latest quarter. Revenues increased to $550.6 million from $465.4 million. 

At its last earnings call in November, the company adjusted its fourth quarter and fiscal 2010 guidance. SunPower said that it now expects fourth-quarter GAAP earnings in the range of $0.45 cents to $0.60 cents per share, non-GAAP earnings of $0.95 to $1.15 per share. Revenues are expected in the range of $870 million to $970 million. Previously, the company anticipated fourth quarter GAAP earnings of $0.40 to $0.65 per share, non-GAAP earnings of $1.05 to $1.35 per share, and revenue of $825 million to $1.02 billion. 

For fiscal year 2010, the company now anticipates GAAP earnings of $0.75 to $0.90 per share, non-GAAP earnings of $1.45 to $1.65 per share, and revenue of $2.150 billion to $2.250 billion. Earlier, the company expected GAAP earnings of $0.25 to $0.55 per share, and non-GAAP earnings of $1.35 to $1.65 per share, and revenue of $2.0 billion to $2.2 billion.

For fiscal year 2011, the company anticipates non-GAAP earnings of $1.75 to $2.05 per share. Revenues for the fiscal year are expected in the range of $2.65 billion to $2.85 billion.

2010 continued the significant growth of the solar market throughout the country with new markets in China and the USA advancing their demand for solar panels. Solar industry as a whole has benefited from continued strong demand thanks to growing awareness about global warming, skyrocketing oil prices, cheap financing and technological advances. Companies involved in the production of semiconductors used in solar panels have enjoyed a positive quarter. Many have experienced rising shipments over the last few quarters, resulting in a sequence of record quarters. The world is becoming increasingly environmentally conscious. Both commercial and private demand for solar power is rising. Solar options are becoming more attractive as more governments provide better options for buildings producing solar power to feed into and out of the grid as required.

Last month, US President Barack Obama in his State of the Union address called for 80 percent of the nation's electricity to come from clean sources by 2035. Meanwhile, Senator Bernie Sanders submitted a bill to congress titled the "10 Million Solar Roofs and 10 Million Gallons of Solar Hot Water Act". This bill is expected to spur alternative energy growth and create green jobs.

SunPower’s customer base is spread across North America, Europe, the Middle East, Asia and Australia. The company is proactive in entering new markets. Apart from a sizeable presence in the US, it is already focusing on improving market share in Spain and Germany, while gaining new market share in emerging markets like Italy, Australia, France, Japan and Greece.SunPower is also increasing its presence within the residential and commercial markets by expanding its network of dealers globally. By fiscal-end 2011 the company expects its global dealer network to almost double to around 2,000 dealers. Finally, by steering clear of long-term contracts for sales through its dealer network, the company gears up for growth in its margins with the help of some short-term upswing in the solar market.

SunPower enjoys premium pricing because of its increased efficiencies, and the declining production costs should help SunPower continue to generate a healthy profit margin. SunPower has the highest efficiency among all players with conversion efficiency greater than 23% for its Gen 3 cell technology. The company produces solar panels with the highest watts per square foot that each panel produces (PTC/sq ft ratings) in the industry. SunPower's panels have 10% greater energy capture than the industry average, are easier to install and cheaper than silicon-based cells.

Meanwhile, the largest market for solar, Germany, is slated for a significant decline in 2011. German government officials and industry groups are reaching an agreement over solar-power subsidy cuts for 2011. Hinging on the volume of new solar power capacity additions, the government may cut incentives by almost 12%, effective July 2011. However, if installations exceed 7.5 gigawatts, subsidy cuts may reach almost 15%.

SunPower has made progress in competitive bidding for big projects in the U.S. Last month, the company signed three power purchase agreements with Southern California Edison (SCE) for delivery of a total of 711 megawatts of solar power. SunPower will install its solar technology at sites in Rosamond and Los Banos, California.

Early in January, the company completed the sale of a 13 MW Solare Roma solar power plant to Allianz Renewable Energy Partners IV Ltd., a wholly-owned subsidiary of Allianz AG. In December, SunPower completed the sale of its 44 megawatt Montalto di Castro solar park to a consortium of international investors that include MetLife Inc. (NYSE: MET), Fondo PPP Italia and Voigt & Collegen.

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