SunPower has postponed the use of new production lines and other plans in order to reduce costs and become more nimble in meeting market demand, the company said Thursday.
The solar panel maker and power project developer has delayed using two newly completed production lines at one of its two factories in the Philippines, said SunPower CFO Dennis Arriola during a conference call with financial analysts to discuss the company's first-quarter earnings. The company would make use of the new production lines when demand improves. SunPower is also delaying the completion of a new factory in Malaysia, he added.
Arriola said the company is implementing other measures in order to cut the planned 2009 operating expenses by $50 million. SunPower expects to cut its capital expenditures for the year. Instead of spending $350 million to $400 million, the company now anticipates spending $250 million to $300 million for this year.
The San Jose, Calif.-based company posted $214 million in first-quarter revenue, a 47 percent drop from the fourth quarter and a 22 percent decline from a year ago.
It reported a first-quarter net loss $4.8 million, or 6 cents per share. The loss included $5 million, or 6 cents per share, for a one-time charge, which resulted from applying a new accounting rule, the company said. SunPower posted a net income of $12 million, or 14 cents per share, for the first quarter of 2008 and a net income of $31.4 million, or 36 cents per year, for the fourth quarter of 2008.
SunPower CEO Tom Werner said the company experienced the "most challenging quarter since we went public in 2005."
How well other solar companies fared during the first quarter will be watched closely as many of them report their earnings in the coming weeks. Oerlikon Solar, which makes factory equipment for producing thin-film solar panels, reported Thursday a 32 percent drop in sales from the first quarter in 2008 (see Green Light post).
For the entire 2009, the company expects to generate $1.3 billion to $1.7 billion in revenue and earnings of 20 cents to 75 cents per share, the company said. SunPower plans to produce up to 400 megawatts of panels this year.
Earlier this year, the company had expected to generate $1.6 billion to $2 billion in revenue, and $1.40 to $1.90 per share in earnings for 2009.
Werner highlighted the deals the company signed recently to build large-scale power plants. Earlier today, the company said it reached a deal to supply up to 100 megawatts of solar panels and other equipment to FPL Group annually from 2010 through 2012. FPL, which owns utility Florida Power & Light and power producer NextEra Energy Resources, has the option to buy another 100 megawatts worth of equipment from SunPower annually under the agreement.
Werner also emphasized that the company's strategy of charging a premium for its solar panels makes sense. SunPower produces crystalline silicon solar cells that can convert 22 percent of sunlight into electricity, the highest efficiency available for that type of solar cells on the market today. Most of the solar panels sold today are made with crystalline silicon cells.
He cited data from the California Solar Initiative, the state's solar rebate program, to show that SunPower was ahead of other panel makers in terms of the number of small solar energy systems (less than 10 kilowatts in capacity) that were installed in the first quarter. SunPower's systems accounted for roughly 38 percent of those installed, he said.
But SunPower is under pressure to cut its solar panel prices, particularly when competitors such as First Solar and Suntech Power have marketed their lower-cost panels aggressively with utilities and independent power producers. First Solar recently won a contract to build a 48-megawatt solar farm in Nevada for Sempra Generation, whose CEO, Michael Allman, cited First Solar's low-cost panels as a key reason for his choice (see Sempra Wants 300M Plus of Solar In Arizona).
The average selling prices for SunPower components did drop less than 10 percent during the first quarter, but Werner didn't detail which components. The company also sells trackers, inverters and other equipment.