SunPower Corp. is negotiating with the International Finance Corp., a private lending institution of the World Bank Group, for a loan of up to $75 million to expand a solar cell factory in the Philippines.
The San Jose, Calif.-based company is hoping to obtain the money to add four solar cell production lines to the factory, SunPower said in a filing with the U.S. Securities and Exchange Commission Friday. The company expects to know within the next two months whether it could secure the loan, said SunPower spokesman Stephen Wright.
The factory already has eight solar cell production lines that can produce 306 megawatts worth of solar cells per year, SunPower said in its 2008 annual report. When completed, the 12-line, $475 million factory should have the capacity to produce 466 megawatts of solar cells per year, the company said. The company, which assembles solar cells into panels for installation, plans to complete the factory expansion by the end of 2009, Wright said.
The company also has another solar cell factory in the Philippines. This older factory has four production lines with an overall capacity of 108 megawatts per year, according to SunPower's annual report.
This year is shaping up to be a difficult one for SunPower, which has lowered its sales expectations since its executives discussed the fourth-quarter and 2008 earnings in January, noted several financial analysts this week.
In his presentation at two investors' conferences this week, SunPower's CFO Dennis Arriola's comments pointed to weaker first-quarter financial results than what the company had anticipated, said Jeff Osborne, an analyst at Thomas Weisel Partners, in a research note. Arriola didn't provide numbers to quantify the company's new sentiment.
SunPower executives previously had said the first-quarter revenue would likely be better than what it generated during the first quarter of 2008, wrote Osborne, adding that he believed the company had been too optimistic. But Arriola's recent comments indicated otherwise, Osborne said.
Arriola said weak demand in Germany and the United States have dampened the company's expectations. Mark Bachman, senior equity analyst at Pacific Crest Securities, included in his research note two quotes from Arriola:
- With regard to the market in Germany: Arriola said: "Seasonal aspects of the first quarter are difficult, especially in Europe and in Germany where we expected quite a few sales. And given all the white stuff on the roofs there isn't a lot of business being done there today or it's being shifted out. So the demand is there, it's just because of the seasonal aspects it's not as – it's not as happening as we would like."
- With regard to the market in the United States: Arriola said: "When you look at the domestic market obviously the U.S. recession, the weak financial markets and the continued uncertainty in consumer confidence, is impacting all aspects of our business in the solar industry and we're no different there."
Bachman said Arriola's comments reinforced his view back in January that the company was underperforming.
"The impact is clear: Q1 will likely miss significantly. We continue to underscore our view that SunPower will not deliver results that are consistent with its 30%/10%/20% operating model," Bachman wrote.
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