After hours yesterday, we got a pair of our reports out of
the solar energy space. Both
SunPower (Nasdaq: SPWRA) and
MEMC Electronic Materials (NYSE: WFR)
delivered some unexpected news.
SunPower turned in some quarterly results that exceeded
the Street's expectations. Revenue clocked in at a
record-high $466 million, representing a 57% sequential lift.
That was well ahead of the 40% improvement that management
forecasted
last quarter. Production also hit a record of 110
megawatts. Gross margins of 19.1% (or 20.7% on a non-GAAP
basis) were impacted in part by an $8.5 million writedown on
some old third-party panels. Backing that out, margins
actually ticked slightly higher sequentially.
Unfortunately, the revenue beat wasn't the only unexpected
aspect of this earnings report. SunPower also narrowed its
full-year revenue guidance. The top end of that range was cut
from $1.7 billion to $1.5 billion. The average analyst
estimate for the year recently stood at a touch over $1.4
billion, so the after-hours sucker punch that SunPower shares
received yesterday seemed harsh to this Fool.
Meanwhile, MEMC announced a very interesting purchase in
conjunction with its quarterly earnings release. The wafer
maker is acquiring
Goldman Sachs (NYSE: GS) backed SunEdison, an
American solar project developer that has built around 300
solar power plants and sports a 1.5 gigawatt pipeline.
Applied Materials (Nasdaq: AMAT) is also an
existing SunEdison investor.
This move by MEMC would seem strange if it weren't so
similar to the steps already taken by Chinese wafer players
LDK Solar (NYSE: LDK) and
ReneSola (NYSE: SOL). Both firms have moved
downstream, hammering out 500-megawatt project development
agreements with Jiangsu province's Yancheng City. ReneSola
has also acquired multiple
celland
modulemanufacturers.
After getting hammered during the downturn, it seems no
one wants to occupy a narrow niche in the solar supply chain.
Vertical integration is all the rage, though it's not clear
that this model will work for everyone. Just as not every
module maker is suited for in-house polysilicon production
(remember when
Trina Solar (NYSE: TSL) floated and then
cannedthat plan?), not every wafer shop is cut out to be
a project developer. This match could ultimately work out for
MEMC and SunEdison, both strong players in their respective
solar segments, but the synergies are somewhat lost on
me.
This article was originally published as
A Pair of Solar Surpriseson
Fool.com
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