More Disaster in Solar Sector

[FBaggins]

Solar PV makers continue to hammer themselves and their peers with a seemingly never-ending torrent of terrible news. After markets closed yesterday LDK Solar Co., Ltd. (NYSE: LDK) revised guidance straight downward for its second quarter ended June 30th and for the full fiscal year. LDK picks up the ball from JA Solar Holdings Co., Ltd. (NASDAQ: JASO), which took the solar PV sector down yesterday on a weaker-than-expected earnings report even after JA Solar had warned that the quarter would be awful. LDK doesn't officially report earnings until August 29th, so there's still plenty of time for the situation to get even worse.

The list of solar companies that have disappointed on earnings is nearly endless, but some of the bigger names are First Solar Inc. (NASDAQ: FSLR), SunPower Corp. (NASDAQ: SPWRA), Trina Solar Ltd. (NYSE: TSL), ReneSola Ltd. (NYSE: SOL), Canadian Solar Inc. (NASDAQ: CSIQ), and Suntech Power Holdings Co. Ltd. (NYSE: STP). Evergreen Solar Inc. (NASDAQ: ESLR) even chose last week to file for bankruptcy.

LDK's revisions were substantial. Revenue guidance for the second quarter from $710-$780 million to $480-$500 million. Analysts had a consensus estimate of $714 million. For the year, forecast revenue was revised downward from $3.5-$3.7 billion to $2.5-$2.7 billion. The company will also write down up to $60 million in inventory. And it gets worse. Gross margins are expected at a meager 1.5%-2.5% on shipments of just 75-80 megawatts of panels in the quarter. How bad is that? The forecast in April called for panel ships in the second quarter of 200-220 megawatts. Full-year shipments are now forecast to fall from 750-800 megawatts to 600-700 megawatts.

So, shipments are tanking and margins are disappearing...
LDK has more problems than just weak shipments and falling margins...
About the only thing that would restore some confidence in the industry is a good quarter, and that does not appear to be in the picture for at least the second half of this year...

http://www.marketwatch.com/story/more-disaster-in-solar-sector-ldk-jaso-fslr-spwra-tsl-sol-csiq-stp-eslr-tan-2011-08-19

[Kolesar]

1. Shipments are not "tanking", the forecasts are just being revised downward

Spare us the hype...

[FBaggins]

3. A drop in shipment expectations from 200 to 75 over a four month period...

...most certainly qualifies as "tanking".

[bananas]

4. We're still in the shake-out phase - I warned about this back in 2007

I also predicted pro-nukes would use this to justify their wrong opinions and flawed analysis:

"Solar PV will reach grid parity in 5-8 years, but an industry shakeout will occur over the next couple of years, and some good companies will go under. I have no doubt that doomers and pro-nukes and pro-coals will use this chaos to justify their wrong opinions and flawed analysis."

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=115x123885

[FBaggins]

6. Interesting... but how much of that prediction has occured?

The corporate finance curve looks wrong so far... certainly the stock performance prediction is way off. "Over the next couple years" certainly implies that it would be over and done by now yet it's just accelerating.

The prediction on that thread that appears closest to accurate is the one that says that in 5-8 years we'll be hearing about grid parity in 5-8 years. Much like "fusion in the next few decades", the future is always just a little ways down the road.

The overall prediction on that OP is that the solar industry would now be right on the cusp of taking off without the need for government incentives. There's no sign of that right now.

IMO, the greatest error is that the thread appears to treat the solar industry as if there will be winners and losers based on good/bad business decisions as the industry shakes out. In reality, it's China's national policies that are driving the rest of the sector under (both good and bad). This isn't consolidation so much as it is slaughter.

But let's give the author props where they are due. His company stock has crumbled from over $90/shr when the article was written to under $6/shr last week. He more than doubled his holdings in company stock very close to those lows. He's putting his money where his mouth is.

[SpoonFed]

7. You sure go out of your way to take an implausible dump on renewables...

dont you? I mean, really... speculation of a double-dip recession abounds and the markets are getting slaughtered by the debt ceiling constructed debacle and you are suggesting that solar should not only be a better technology than nuke filth but that it should be immune to the global economic crisis as well... incredible.

[FBaggins]

8. No.

Sorry if you haven't been paying attention.

[OKIsItJustMe]

2. Where “disaster” in no way involves a radiation leak

So, it seems solar companies are not immune to the financial woes of the rest of the market!

[Rageneau]

5. Why do I suspect that this solar disaster is oil-industry related?