SunPower Warns of Wider 2Q Losses

Jul. 26, 2011 10:36 AM ETSunPower Corporation (SPWR)
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By Michael Kanellos

SunPower Warns of Wider 2Q Losses: Will More Bad News Follow?

Is it a temporary headache, or bad times ahead, for the solar industry?

SunPower (SPWRA) announced Monday that its second quarter losses would be greater than anticipated. Non-GAAP losses should come to around 19 to 20 cents per share, more severe than the five cent loss to ten cent non-GAAP profit expected earlier. Gross margin will come to 12 to 13 percent instead of 15 to 17 percent.

Margins in the first quarter came to 19.6 percent and the first quarter margins represented a disappointing slide from earlier times. So in all, this is curve that goes down to the right.

"While we met our revenue goals for the second quarter, our gross margin and bottom line performance was impacted by market conditions in Germany and Italy," said Tom Werner, SunPower president and CEO. The quarter also includes one-time charges of $75 million. Including all expenses, losses should come to $1.50 to $1.55 per share.

As a highlight, Werner said that SunPower continues to cut costs and that it reduced inventory. Revenue will come in at $590 to $595 million, in line with earlier estimates of revenue at $550 to $600 million.

It is a refrain heard before. In the first quarter, SunPower's revenue came to $451 million, well above the $347 million of the first quarter of 2010 but below expectations. European conditions were to blame.

One can imagine the new corporate masters at Total are thrilled. The French oil giant bought 60 percent of SunPower in April for around $2.3 billion.

Although SunPower makes some of the more expensive (and efficient) panels in the industry, these problems will send chills through the solar world and prompt debate over whether the industry is going through a interim lull or on the verge of extended dismal times. Simply put, the world has

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