MEMC Electronic Materials Inc. Earnings: Margins Shrink as Revenue Falls

S&P 500 (NYSE:SPY) component MEMC Electronic Materials Inc. (NYSE:WFR) reported its results for the fourth quarter. Memc Electronic Material manufactures and sells silicon wafers that are used primarily in semiconductor and solar energy technologies.

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MEMC Electronic Materials Earnings Cheat Sheet for the Fourth Quarter

Results: Reported a loss of $1.48 billion ($6.44 per diluted share) in the quarter. The semiconductor company had net income of $12.6 million or 5 cents per share in the year earlier quarter.

Revenue: Fell 15.6% to $717.8 million from the year earlier quarter.

Actual vs. Wall St. Expectations: MEMC Electronic Materials Inc. reported an adjusted net loss of 9 cents per share. By that measure, the company beat the mean analyst estimate of a loss of 14 cents per share. It fell short of the average revenue estimate of $769.5 million.

Quoting Management: “During the fourth quarter and in the midst of a semiconductor market cyclical downturn and what we view as a prolonged and severe solar market dislocation, we initiated a broad restructuring to improve our overall competitive position,” said MEMC’s Chief Executive Officer Ahmad Chatila. “While the semiconductor market remains soft, we see signs of an improved second half of 2012. As the market recovers, we believe our productivity efforts and 300mm expansion will pay dividends. In the restructuring, we have sized the Solar Materials business to supply our downstream pipeline with low cost, high quality solar materials products. Although solar interconnections roughly doubled in 2011 and we expect strong growth in 2012, uncertainty regarding feed-in-tariffs and credit markets in Europe will remain challenging in 2012. Our operations and pipeline in the most promising, stable markets, and our brand recognition position us for long-term growth in solar. Through productivity and restructuring efforts, we will be positioned for both semiconductor, and eventually solar, market upturns.”

Key Stats:

Gross margins fell 21.8 percentage points to -8.2%. The contraction appeared to be driven by falling revenue, as the figure fell 15.6% from the year earlier while costs rose 5.8%.

A year-over-year revenue decrease last quarter snaps a streak of four consecutive quarters of revenue increases. The best quarter in that span was the fourth quarter of the last fiscal year, which saw revenue rise more than twofold.

The company topped expectations last quarter after falling short of forecasts in the third quarter with net income of 3 cents versus a mean estimate of net income of 10 cents per share.

For the fiscal year, the average estimate has moved down from 47 cents a share to 33 cents over the last ninety days.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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To contact the reporter on this story: Derek Hoffman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com