SunPower to Miss Expectations - Analyst Blog

SunPower Corporation (SPWRA) reported preliminary results for its second quarter 2011, which is scheduled to be released on August 9, 2011. The company expects pro forma loss per share for the quarter to be in the range of 19 cents to 20 cents, much wider than its previous expectation of a loss of 5 cents to earnings of 10 cents. The Zacks Consensus Estimate for the quarter is currently pegged at a loss of 14 cents per share.

For the quarter, SunPower expects GAAP loss per share in the range of $1.50–$1.55. This includes one-time pre-tax charges of approximately $75 million. These charges comprise a $29.3 million charge related to the company's panel reallocation strategy, $13.1 million in expenses related to the Total tender offer, and $32.5 million related to the write-down of third-party inventory and costs associated with the termination of third-party cell supply contracts.

SunPower narrowed its revenue guidance range to $590–$595 million for the most recent quarter from the prior expectation of $550–$600 million. The guidance is above the Zacks Consensus Estimate of $573 million.

SunPower now expects a lower pro forma gross margin between 12% and 13%, down from the previous expectation of 15%–17%.

For fiscal 2011, the current Zacks Consensus Estimates for earnings per share and revenue are a respective 76 cents and $2,779 million.

Recently, TOTAL S.A. (TOT) acquired a 60% stake in SunPower to create a new global leader in the solar industry. As part of the deal, TOTAL completed an all-cash tender, buying all the Class A and Class B shares for a total value of $1.3 million. In the transaction, TOTAL acquired 30,220,701 shares of Class A common stock and 25,220,000 shares of Class B common stock at a purchase price of $23.25 per share.

Following the completion of the transaction, SunPower will operate as a subsidiary of French oil producer TOTAL. However, SunPower will continue to trade on NASDAQ under the symbols “SPWRA” and "SPWRB".

SunPower Corporation has a diversified channel strategy with a strong presence in the residential and commercial market, along with its status as a conversion efficiency leader for the mass market. The company also has a steadfast focus on spreading out its revenue stream across the solar value chain from cells to systems installation. The company presently retains a short-term Zacks #3 Rank (Hold). However, we have a long-term Neutral recommendation on the stock.