SunPower Shares Down Sharply On Disappointing Guidance
By Eric Savitz
* Thursday, March 18, 2010 ET
SunPower (SPWRA) shares are down sharply in late trading on a disappointing forecast for the first quarter and for all of 2010.
For Q4, the solar products company posted revenue of $548 million, ahead of the Street at $490.9 million. The company posted non-GAAP EPS of 47 cents, or 50 cents excluding charge of 3 cents a share related to its recent accounting investigation, a penny ahead of the Street at 49 cents.
But the guidance was alarmingly weak: SunPower said it sees non-GAAP Q1 revenue of $330 million to $350 million, with profits of 5 cents a share, well below the Street at $427.3 million and 34 cents. For the full year, the company expects revenue of $2 billion to $2.05 billion, with profits of $1.25 to $1.65 a share; the Street has been forecasting $2.06 billion and $1.78 a share.
The company also said it has completed its internal accounting investigation of issues at its Philippine operations. SPWRA said the Audit Committee of the company’s board “concluded that certain unsubstantiated accounting entries were made at the direction of Philippines-based finance personnel in order to report results for manufacturing operations that would be consistent with internal expense projections.” The company said the issue was confined to the accounting function in the Philippines, and that executive management neither directed nor encouraged, nor was aware of, the inaccurate entries.
The company said that the overall impact of the issue was to understate costs of goods sold.
SPWRA is restating its results for 2008 and all interim periods for that year, as well as for the first three quarters of 2009. The company also said that the investigation also discovered “various accounting errors” in addition to those triggered the investigation. The company said that the Audit Committee recommended “various remedial measures to address certain personnel, organizational and internal control matters.”
The company said the cumulative effect of the restatement is increasing pre-tax expense by $33.2 million, and reducing net income by $16.9 million over the entire period, excluding $3.6 million in investigation expenses incurred in Q4.
Finally, the company said that it has concluded that the control deficiencies uncovered in the Philippines constituted “material weaknesses” in internal controls.
SPWRA in late trading is down $1.74, or 7.9%, to $20.30.
Update: In a slide prepared for the company’s post earnings conference call, the company said it expects a 20% decline in pricing by the end of 2010.
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