SunPower’s Q3 loss exceeds expectations

In another sign of the difficult market conditions facing photovoltaic manufacturers, SunPower has posted close to $50 million in losses for Q3, as declining revenue from Europe and falling prices pushed revenues down. In response to the shifting market, the company has reiterated its shift towards markets such as Africa, Asia and Australia.

Bloomberg has reported that the loss, which translates to $0.41 per share, is worse than analysts had expected. Bloomberg reported that analysts had predicted losses for the quarter of approximately $0.21 per share, based on eight analysts’ figures. While these losses are significant, they are an improvement on Q3 2011, when the company posted a loss of $370.8 million, or $3.77 a share.

On the positive side of the equation, SunPower, which is based in San Jose, California, reported that sales have increased 30% in Japan and 36% in the Americas, from Q2. The Americas result can be attributed to continuing installation at its 601 MW Antelope Valley and 250 MW California Valley Solar Ranch (CVSR) projects. SunPower CEO Thomas Werner reported that 150 MW of panels have been installed at the CVSR, with 22 MW already grid connected.

SunPower CFO Charles D. Boynton summed up the Q3 performance as "solid", despite the loss. "We saw outperformance in North America and Japanese markets, but the strength was more than offset by the continued weakness in Europe."

SunPower’s inventory was reduced by $40 million in Q3, and the company has $375 million in cash. SunPower is majority owned by French energy giant Total.

SunPower executives also chose to highlight the continuing growth of its SunPower Leases, with CEO Werner reporting that in California, SunPower solar lease products captured 40% of the leasing market. "In the North American Residential market, we were once again by far, the largest lease provider."

In terms of manufacturing operations, SunPower’s output was down on Q3 2011, from 272 MW to 227 MW. SunPower has previously announced the idling six of its 12 lines in Fab 2 in the Philippines, and the laying off of 900 staff. Werner described the decision, in a conference call announcing the results, as a "painful step."

Despite the strong performance of the SunPower solar lease product, Bloomberg has also indicated that the company will have to replenish its utility-scale pipeline in the U.S., as its two major projects continue to be built out. Bloomberg cited JPMorgan Chase & Co. analyst Chrisopher Blansett in saying that U.S. solar companies First Solar and SunPower are, "living off borrowed time," if they are unable to do so.

Silicon Valley’s Mercury News also reported concern about SunPower’s utility scale business. It quoted National Securities analyst Ramesh Misra in saying: "Utility projects dwarf residential, and I never thought that SunPower wanted to be a purely residential player. They need to ramp up the utility business."