Suntech Power Holdings Earnings: Misses Estimates as Company Swings to a Loss

Suntech Power Holdings Co. Ltd. (NYSE:STP) swung to a loss in the first quarter, missing analysts’ forecast. Suntech Power Holdings is a solar energy company. The company designs, develops, manufactures and markets a number of PV cells and modules, including a range of value-added building-integrated photovoltaics products.

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Suntech Power Holdings Earnings Cheat Sheet for the First Quarter

Results: Reported a loss of $133 million (74 cents per diluted ADS) in the quarter. Suntech Power Holdings Co. Ltd. had a net income of $31.9 million or (17 cents per ADS) in the year-earlier quarter.

Revenue: Fell 53.3% to $409.5 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Suntech Power Holdings Co. Ltd. fell short of the mean analyst estimate of a loss of 48 cents per share. Analysts were expecting revenue of $408.2 million.

Quoting Management: “First quarter shipments were 27% lower than our fourth quarter shipments, which is better than our previous projection of a 30% decline. The sequential decrease in shipments was primarily due to limited inventory on hand early in the quarter and a planned reduction in our production level over Chinese New Year,” said Dr. Zhengrong Shi, Suntech’s chairman and CEO. “During the quarter, we reduced our total production cost by 6% sequentially, despite lower utilization, and maintained a healthy cash balance.” “Cost reduction continues to be the top priority for our business and we have outlined a clear roadmap for the remainder of the year. Suntech’s differentiated technology development capability will play a vital role in driving ongoing cost reduction. For example, we recently launched a powerful 310 watt solar panel and a slim frame 60-cell panel, which has been designed to be one of the lightest in the industry. Innovations such as these increase system power output, lower shipping costs and improve ease-of-installation. Our innovation-based product development will reduce cost without compromising quality, and generate value for our customers.”

Key Stats:

The company has now missed analyst estimates for the last four quarters. It fell short by 44 cents in the fourth quarter of the last fiscal year, by 34 cents in the third quarter of the last fiscal year, and by 35 cents in the second quarter of the last fiscal year.

Looking Forward: Analysts seem more negative about the company’s results for the next quarter than ninety days ago. The average estimate for the second quarter has moved from a loss of 22 cents a share to a loss of 36 cents over the last ninety days. Down from a loss of 75 cents per share ninety days ago, the average estimate for the fiscal year is now a loss of $1.27.

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

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