SunPower announces restructuring program, lowers Q4 guidance, sees CFO go04. November 2011 | Industry & Suppliers, Markets & Trends | By: Becky Stuart
Another victim of this year’s turbulent solar market, solar cell manufacturer, SunPower has said it will be implementing a restructuring program in the fourth quarter (Q4)of this year. Having missed its 3Q 2011 revenue and margin expectations, it has significantly revised its Q4 guidance downwards.
The company predicts that the restructuring program will reduce operating expenses by as much as 10 percent next year.
In a company note, Jefferies comments, "The company’s plan to reduce process steps is on track and cost is expected to reach $1.42-1.58/w despite a negative $0.04/w impact from lower utilization with more than 20 percent production pull-back in Q4."
As part of the program, it has been announced that CFO, Dennis Arriola will be departing the company in March 2012, while Jim Pape, president, Residential and Commercial, will leave later this month.
To compensate, SunPower says that several of its "longest-tenured executives" will adjust their areas of responsibility. They include Howard Wenger, who will assume the title of president, Regions, Jack Peurach, who will undertake the role of executive VP, Products, and Marty Neese, who will remain as COO, with expanded responsibilities. The changes are said to be effective immediately.
At $705.4 million, SunPower’s Q3 revenues fell short of the expected $748.8 million. They did, however, represent a sequential increase from $592.3 million in Q2 2011, and $550.6 million in Q3 2010.
GAAP gross margin, meanwhile, was 10.8 percent, which is up from 3.3 percent in Q2, but still significantly down from Q3 2010, which saw a margin of 20.4 percent.
GAAP net income experienced a big fall, from $-147.9 million in Q2 2011 and $20.1 million in Q3 2010, to $-370.8 million in Q3 2011. Non-GAAP gross margin also took a tumble, from 22.3 percent in Q3 2010 and 12.5 percent last quarter, to 11.4 percent this quarter. Predictions were, that it would rise to 13.4 percent this quarter.
Tom Werner, president and CEO commented, "Our GAAP financial results for the quarter include a pre-tax, non-cash charge totaling approximately $349.8 million related to the impairment of goodwill and intangible assets primarily attributable to the company's public market valuation on September 30."
He also reported that SunPower has gained share in both the U.S. and German residential and commercial businesses.
In light of the current conditions, SunPower has reduced its Q4 GAAP guidance, from an expected $948.8 million (estimated by Jefferies), to between $575 million to $625 million (non-GAAP $675 million to $725 million), and its GAAP gross margin from an expected 20.6 percent (again estimated by Jefferies), to between seven and nine percent (non-GAAP 10 to 12 percent).
For the full year, the company expects to reap revenues of $2.30 billion to $2.35 billion, as opposed to between $2.8 billion to $2.95 billion, and a gross margin of between nine and 11 percent. In terms of photovoltaic module shipments, it predicts that between 790 to 815 megawatts (MW) will be shipped, as opposed to between 900 and 950 MW.
Werner added, "As a result of the expected restructuring program under consideration, the company believes it may incur a one-time, pre-tax charge of approximately $10 million, which is not included in current 2011 GAAP guidance."
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