Previously having forecast a slight increase in revenues of 635.7 million from 2010, Phoenix Solar has said, in a statement released, that it anticipates revenues in the range 350 million to400 million, resulting in losses of 42 million to 49 million in 2011.
The company has attributed the losses to, "the write-down of inventories resulting from the continuing decline in the market price for solar panels."
Industry analysts Jefferies has responded to the announcement by saying that the losses are, "much worse than anyone had expected." As Phoenix Solar cited the weak German market as one of the primary reasons behind the poor results forecast, Jefferies writes that this, "does not bode well for the rest of the solar sector."
Jefferies attributes to the inventory write-offs to binding First Solar supply contracts in which the prices are, "set too high against the price of polysilicon modules."
The analysts continue that while falling prices would intuitively seem to favor integrators, if large volumes of modules had been purchases in the previous quarter, selling module losses would cause stress to balance sheets. Jefferies notes that German installer Geckologic went into bankruptcy last week.
In Phoenix Solars favor, says Jefferies, is its strong balance sheet position with equity of 122 million. This can be converted into cash.
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