Sunpower Solar Stock Hits Slump
Solar Panel Provider Hits Decline in First Quarter Sales-
SunPower (Nasdaq: SPWR), a solar photovoltaic engineering company based in California, stock shares plummeted by more than 2 percent following the company’s report of unexpected losses in its first 
quarter. Revenue dropped a staggering 22 percent to $213.8M from the previous quarter and recorded net loss totals $4.79M, or $0.06 per share. The solar power company has scratched its expected income for 2009 and is now projecting revenue of $1.3 to $1.7 billion for the year, with $1.25 to $1.75 profit per share. The company first cut its 2009 revenue forecast last November and attributed the loss to the company’s decision to switch its currency to the euro, which later depreciated against the dollar. To add insult to injury, since then the market for solar panels has slowed, which has left many solar companies with a great deal of leftover inventory. Sunpower then cut its 2009 predictions a second time in March, forecasting company revenue of $1.6-$1.8 billion and per share profit of $2.20-$2.80. Company CEO Tom Werner released a statement regarding the disappointing report, affirming that the first quarter has been the most challenging since the company went public in 2005. He blamed the weak sales on the country’s credit problems and slow economy; as well as severe weather issues on project sites in Germany and California.
Sunpower is currently preserving its cash supply by cutting capital spending to approximately $250-$350M, down from $350-$400M, and hasn’t began production on its final two lines or Fab 2 due to weak demand. Furthermore, to cut spending they are delaying the construction of the planned Malaysian plant and is relying heavily on its avenue in residential solar panels to accommodate its spending needs for the rest of the year. This is considered somewhat of a risky move in the market, however, due to the unstable nature of residential business. Analysts, like Jeff Osborne, claim that any short-term recovery in Sunpower sales could come at the expense of margins. “SunPower’s high inventory this quarter is alarming,” Osborne said. “Management is confident they will be able to work through that inventory in the next quarter, but we believe it will be difficult given our current outlook… The near-term environment is challenging.” Sunpower is expecting to generate 400 megawatts of solar cells and solar panels in 2009 and are among the solar energy companies that are projecting stimulation in the United States economy by the second half of the year. Tom Werner, states, “We have responded to current market conditions by moving to a demand-driven manufacturing model and reducing our planned operating expenses to align with our adjusted revenue outlook.” SunPower is currently the leading manufacturer of crystalline silicon solar arrays in America and is a majority-owned subsidiary of Cypress Semiconductor (Nasdaq: CY).
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I don’t see why this news strikes people as shocking. We sit amidst a recession people; little to no jobs, everyone trying to save for an upcoming emergency. Solar energy is too expensive and expansive to set up compared to other resources. If you’ve got a 500 acre plot you’re willing to drop a few million dollars on(that happens to be in a dominantly sunny part of the country) then by all means, I’m all for it. But unless there’s a profit margin involved, you probably shouldn’t count on our underpaid and unemployed to invest in a new industry. That’s the job of the companies.
It’s been proven down the line that renewable resources, such as wind and solar are best utilized, not on a grand scheme, but in smaller, more localized clusters. It’s not in the nature of electricity to travel so far, and in doing so, we waste quite a substantial amount of resources. Why not start supplying the immediate areas surrounding the plants and sell the surplus back. If more did that, less would be needed from outside sources. PLUS, the sun never stops shining completely, the wind never stops blowing completely. Once the overhead of the generators is paid off, the maintenance is minimal,and the profits are virtually perpetual.
I won’t lie. Solar energy isn’t my gig, even living in the sunshine state. They’re big and expensive. I’m a wind power advocate myself. BUT they’re both clean, unending, acceptable alternatives to coal and nuclear power. I live on the shore where wind is strong and land space is small and expensive. Wind power is more suited for here, unless they install cells on the top of the hotels…hmmm (there’s a thought…)
Anyways…Start looking to other alternative energy sources. They’ve got solar figured out. It’s when we put the sources together that we get true power. (ex. solar cells don’t produce during a storm…storms bring wind…wind turbines accommodate the solar cells during the storms. That doesn’t require genius, just a little organization.
Florida Tempest Wind Co.
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