SunPower Beats EPS, Misses Rev

SunPower Corporation’s (SPWR - Analyst Report) fourth quarter 2011 adjusted loss (including stock-based compensation but excluding amortization of intangibles) of 21 cents per share was narrower than the Zacks Consensus Estimate of a loss of 26 cents per share, in contrast to the year-ago earnings of $1.33. On a reported basis, the company digested a loss of 84 cents per share versus earnings of $1.44 per share in the year-ago quarter.

In recent times, solar players across the board have witnessed down sliding fortunes owing to a global oversupply of solar panels leading to lower revenues and contraction of margins. The glut is brought on by the aftershocks of global recession, the ongoing Euro crisis, which is leading to governmental cutbacks on solar subsidies.

Operational Results

SunPower generated revenues of $563.4 million versus the Zacks Consensus Estimate of $682.0 million and $937.1 million recorded in the previous year quarter. The company’s “Residential and Commercial” and “Utility and Power Plant” segments accounted for 66.1% and 33.9% of quarterly revenues, respectively. Revenues from “Utility and Power Plant” fell to $191.3 million from $664.2 million in the prior-year quarter. In contrast, revenue from “Residential and Commercial” rose to $372.1 million from $272.9 million in the year-ago quarter.

SunPower’s gross margin for the quarter contracted 1,420 basis points to 12.4% versus 26.6% year over year. Overall, the company suffered a net loss of $83.1 million versus a net income of $152.3 million in the year-ago quarter.

Financial Condition

SunPower at the end of the reported period had cash and cash equivalents of $657.9 million, compared with $605.4 million at fiscal-end 2010. Convertible debt increased to $620.0 million from $591.9 million at fiscal-end 2010.

Outlook

SunPower is a vertically integrated solar company with presence across the entire solar value chain. The company designs, develops, manufactures, markets and sells high-performance solar electric power technology products, systems and services worldwide for residential, commercial and utility-scale power plant customers. The company’s semiconductor-based solar cells and solar panels, which convert sunlight into electricity, are manufactured using proprietary processes and technologies. SunPower is largely owned by French oil major Total S.A. (TOT - Analyst Report).

SunPower expects its net loss to be in the range of 60 cents – 45 cents per share in the first quarter of fiscal 2012, and its adjusted loss to be in the range of 20 cents – 5 cents per share. Quarterly revenue is expected to be in the range of $420 million – $495 million.

SunPower projects revenues of $2.6 billion – $3.0 billion for fiscal 2012 and remains committed to achieve break even or better adjusted profitability.

SunPower currently retains a short-term Zacks #4 Rank on the stock, which translates into a Sell rating. Over the longer run, however, we maintain our market neutral recommendation on the stock.

Read the full analyst report on TOT

Read the full analyst report on SPWR