SunPower Profit May Rise to a Record on Solar Demand
By Christopher Martin /April 16, 2”8
Source: Bloomberg.com
http://www.bloomberg.com/apps/news?pid=20601103&sid=a8gyGag0QSjU&refer=news
SunPower Corp., the second-biggest U.S. solar-cell maker, may report a record profit after rising oil and gas costs increased demand for alternative energy systems from Italy to California. First-quarter net income probably rose to $12 million, or 14 cents a share, from $1.2 million, or 2 cents, a year earlier, according to the average of 12 analyst estimates compiled by Bloomberg. Sales likely soared 71 percent to $245 million, the data show.
Chief Executive Officer Thomas Werner oversaw the takeover of Italy’s Solar Solutions, sold an eight-megawatt panel system in Spain and agreed to supply seven Wal-Mart Stores Inc. sites in California. SunPower, the first publicly traded U.S. solar company to announce results, may be followed by gains at First Solar Inc. and China’s Suntech Power Holdings Co.
“SunPower is leading the pack in terms of efficiency and profitability,” said Kevin Landis, chief investment officer at Firsthand Capital Management in San Francisco, which holds $750 million of investments including Suntech, Trina Solar Ltd. and SunPower’s majority owner Cypress Semiconductor Corp. “The whole industry is deep into a period of significant growth.”
SunPower, based in San Jose, California, climbed $2.02, or 2.1 percent, to $96.44 as of 9:36 a.m. in Nasdaq composite trading. The shares had fallen 28 percent this year, compared with the 16 percent drop in the PowerShares Global Clean Energy Portfolio. First Solar rose $4.86, or 1.7 percent, to a record $292.18 and Suntech gained $1.07, or 2.4 percent, to $46.17.
Record oil and coal costs, as well as concern that increased use of fossil fuels is feeding global warming, have propelled solar power growth by 40 percent a year over the past four years, a pace that analysts expect will continue as manufacturers drive down costs.
Cutting Costs
Werner plans to reduce the cost of making solar cells 50 percent by 2012 by reducing use of polysilicon, the most expensive component, increasing production, and by making panels easier to install. SunPower, which reports tomorrow, declined to comment before then, said Helen Kendrick, a spokeswoman.
The company says its solar cells are the world’s most efficient, converting up to 22 percent of absorbed sunlight into electricity, compared with about 15 percent for standard photovoltaic modules. Germany, SunPower’s largest market with about half of 2006 sales, has been losing ground to the U.S. and Spain, analysts say.
“SunPower has a lot of exposure to Spain so their comments on the outlook there will be a very important indicator for the industry,” said John Hardy, an analyst at American Technology Research in Greenwich, Connecticut. “We also want to hear what they forecast for Italy, which seems to be southern Europe’s heir apparent to Spain.”
Doubling Output
SunPower plans to more than double output to 250 megawatts this year and exceed 430 megawatts in 2009 with new factories in the Philippines. The company last year raised its ranking among the world’s solar cell producers to eighth from 11th, according to industry publisher Prometheus Institute.
“We’re looking to see who’s got the best polysilicon contracts, because that will tell us who’s going to make their growth targets, and who might not,” Firsthand’s Landis said in an interview.
SunPower agreed to a 10-year contract with NorSun AS of Norway on Jan. 16 to purchase enough polysilicon to build 2,500 megawatts of panels.
First Solar
Phoenix-based First Solar, the largest U.S. solar power manufacturer by market value, is expected to earn $35 million, or 44 cents, in the first quarter, up from $5 million, or 7 cents, a year earlier, according to data compiled by Bloomberg.
Suntech’s first-quarter profit is expected to almost double to $50 million, or 29 cents a share, from $26 million, or 16 cents, a year earlier, the data show.
Evergreen Solar Inc., which reports after the close of trading tomorrow, is expected to have a loss of 7 cents a share, smaller than the 9-cent loss a year earlier.