24/7 Wall St. » JASO

24/7 Wall St. Closing Bell (V, MA, C, CVX, APD, EBAY, ZZ, BLK, BAC, FCS, FCX, MS, LUV, EGHT, TSL, JASO, STP)

Paul Ausick — Thu, 19 Jan 2012 21:04:43 +0000

Stocks opened higher this morning and have mostly remained in positive territory throughout the day. Reports that China was considering lowering its banks’ capital reserve requirements boosted both Asian and European markets this morning, while early morning earnings reports put more air under the opening. Morning reports from the federal government on natural gas, crude oil, and refined products inventories weighed on both commodity prices and energy stocks. Crude is mixed today, with WTI down -0.28% at $100.31/barrel and Brent up 0.7% at $111.44. Gold fell about -0.45% today to $1,652.50.

The unofficial closing bells put the DJIA up about 46 points to 12,625.19 (0.37%), the NASDAQ rose more than 18 points (0.67%) to 2,788.33, and the S&P 500 rose 0.5% or more than 6 points to 1,314.52.

There were several analyst upgrades and downgrades today, including Visa Inc. (NYSE: V) started as ‘outperform’ at Credit Suisse; Mastercard Inc. (NYSE: MA) started as ‘outperform’ at Credit Suisse; Citigroup Inc. (NYSE: C) maintained ‘sell’ at Argus; Chevron Corp. (NYSE: CVX) maintained as ‘buy’ with target price of $130 but lowered estimates at Argus; and Air Products and Chemicals Inc. (NYSE: APD) cut to ‘neutral’ at JPMorgan.

Earnings reports since markets closed yesterday have led to some price changes as of the last half hour of trading today: Ebay Inc. (NASDAQ: EBAY) is up nearly 4% at $31.55; Sealy Corp. Inc. (NYSE: ZZ) is down nearly -18% at $1.51; Blackrock Inc. (NYSE: BLK) is down -0.75% at $186.39; Bank of America Corp. (NYSE: BAC) is up 2.65% at $6.98; Fairchild Semiconductor International Inc. (NYSE: FCS) is down -3.51% at $14.02; Freeport-McMoran Copper & Gold Inc. (NYSE: FCX) is down -0.22% at $44.37; Morgan Stanley (NYSE: MS) is up 5.42% at $18.29; and Southwest Airlines Co. (NYSE: LUV) is up 3.33% at $9.32.

Other standouts from today include the following stocks:

8×8 Inc. (NASDAQ: EGHT) is up more than 26% at $4.30. The telecom services company reported much better-than-expected earnings for its third fiscal quarter.

Trina Solar Ltd. (NYSE: TSL) is down more than -15% at $8.32. The solar panel maker is falling following Germany’s announcement that it will begin lowering its solar subsidies.

JA Solar Holdings Co. Ltd. (NASDAQ: JASO) is down nearly -15% at $$1.80. This Chinese solar panel maker is suffering from the German subsidy cut as well.

Suntech Power Holdings Co. Ltd. (NYSE: STP) is down -14% at $3.18. Another Chinese solar maker hit by the cuts to German subsidies. The list could go on, but you get the idea.

Stay tuned for Friday. We have noted the following event on the schedule (all times Eastern):

10:00 a.m. – Existing home sales

Paul Ausick

Filed under: HI/LOW, Market Close, The Day Tagged: APD, BAC, BLK, C, CVX, EBAY, EGHT, FCS, FCX, JASO, LUV, MA, MS, STP, TSL, V, ZZ

24/7 Wall St. Closing Bell (ALU, WBMD, URBN, RL, AWK, LEN, SVU, SHIP, LEDS, SNX, JASO, YRCW, CROX, HL, HRC)

Paul Ausick — Wed, 11 Jan 2012 21:05:20 +0000

Equities opened modestly down this morning and the three major indexes have stayed within a few points of flat all day. The NASDAQ composite has remained in positive territory as the technology sector has benefited from a sharp buying trend in solar stocks. The EIA’s weekly petroleum report came in with a crude build of 5 million barrels, way above an expected gain of 1 million barrels. The report weighed on energy stocks since mid-morning. The euro has also been weaker today, adding a bit of push to equity buying. Crude oil is ending the day down, with WTI crude down about -1.3% at $100.92/barrel and Brent crude is down 0.64% at $112.55/barrel. Gold closed higher, at $1,640.50/ounce, after posting a four-week high earlier today.

The unofficial closing bells put the DJIA down more than 13 points to 12,449.08 (-0.11%), the NASDAQ rose more than 8 points (0.31%) to 2,710.76, and the S&P 500 rose 0.03% or less than 1 point to 1,292.44.

There were several analyst upgrades and downgrades today, including Alcatel-Lucent, S.A. (NYSE: ALU) raised to ‘buy’ at Deutsche Bank; WebMD Health Corp. (NASDAQ: WBMD) cut to ‘market perform’ at Wells Fargo; Urban Outfitters Inc. (NASDAQ: URBN) cut to ‘sell’ at Citigroup; Ralph Lauren Corp. (NYSE: RL) cut to ‘market perform’ at Wells Fargo; and American Water Works Co. Inc. (NYSE: AWK) raised to ‘buy’ at Ladenburg Thalmann.

Earnings reports since markets closed yesterday have led to some price changes: Lennar Corp. (NYSE: LEN) is up 6.3% at $22.07 after posting a new 52-week high of $22.53 earlier today; Supervalu Inc. (NYSE: SVU) is down nearly -13% at $7.33; Seanergy Maritime Holdings Corp. (NASDAQ: SHIP) is up more than 5.5% at $2.65; SemiLEDS Corp. (NASDAQ: LEDS) is more than 5% at $3.69; and Synnex Corp. (NYSE: SNX) is up more than 8% at $34.80.

Other standouts from today include the following stocks:

JA Solar Holdings Co. Ltd. (NASDAQ: JASO) is up more than 37% at $1.97. The Chinese solar maker is among several Chinese solar companies getting a boost today from news that solar panel prices appear to be stabilizing. We have more coverage here.

YRC Worldwide Inc. (NASDAQ: YRCW) is up nearly 16% at $11.38. The transportation company has said it will auction 62 of its surplus US sites.

Crocs Inc. (NASDAQ: CROX) is up more than 17% at $18.73. The funny-shoe company has estimated that sales in the current fiscal year will top $1 billion for the first time.

Hecla Mining Co. (NYSE: HL) is down about -22% at $4.55, after posting a new 52-week low of $4.25 earlier today. The silver miner has lowered its production estimate due to a forced closure of a shaft at its Nevada mine.

Hill-Rom Holdings Inc. (NYSE: HRC) is down nearly -12% at $30.45. The medical equipment maker and services provider lowered fourth-quarter and full-year guidance last night.

Stay tuned for Thursday. Here are the noteworthy events on the schedule (all times Eastern):

8:30 a.m. – Initial unemployment benefits claims report
8:30 a.m. – Census Bureau retail sales report
10:00 a.m. – Census Bureau business inventories report
10:30 a.m. – EIA weekly natural gas status report
1:00 p.m. – 30-year bond auction
2:00 p.m. – US Treasury budget
4:30 p.m. – Federal Reserve balance sheet

Paul Ausick

Filed under: HI/LOW, Market Close, The Day Tagged: ALU, AWK, CROX, HL, HRC, JASO, LEDS, LEN, RL, SHIP, SNX, SVU, URBN, WBMD, YRCW

BP Will Exit Solar Panel-Making Business (BP, FSLR, SPWR, JASO, LDK, TSL, STP)

Paul Ausick — Wed, 21 Dec 2011 18:49:55 +0000

In September 2010, BP plc (NYSE: BP) fired 320 workers at its solar panel-making operation in Maryland because it could not compete with manufacturers like First Solar Inc. (NASDAQ: FSLR), SunPower Corp. (NASDAQ: SPWR), JA Solar Holdings Co. Ltd. (NASDAQ: JASO), LDK Solar Co. Ltd. (NYSE: LDK), Trina Solar Ltd. (NYSE: TSL), and Suntech Power Holding Co. Ltd. (NYSE: STP). Today the company said it would fire another 100 employees in its BP Solar business and shut the business down altogether.

The Financial Times cites an internal memo from BP Solar’s CEO:

The continuing global economic challenges have significantly impacted the solar industry, making it difficult to sustain long-term returns for the company.

A company spokesperson confirmed the closure, “Over the last six months we have realised that we simply can’t make any money from solar.” Falling prices for solar panels have killed a business that BP has operated for 40 years.

On the same day, a solar industry group called the Coalition for Affordable Solar Energy (CASE) has released a letter to the CEO of Germany’s Solarworld US operations urging the company to withdraw a suit filed with the US International Trade Commission seeking tariff protection on solar panels imported from China. The letter states, that the suit “threatens the planned installation of solar electric power systems in the amount of $11 billion in 2012 and the potential installation of $60 billion currently in the total pipeline.”

The letter goes on to note:

SolarWorld’s petition will do far more damage than good to the U.S. solar industry as a whole. CASE’s membership is representative of 97-98% of America’s solar industry, as the large majority of all U.S. solar industry jobs are downstream of solar panel manufacturing in project development, logistics, construction and installation.

Solar panel makers, even including low-cost Chinese providers, are staggering under collapsing prices, while solar installers, like those that are members of CASE, are getting a big boost from the low prices for solar panels. More than 100,000 Americans are currently employed installing solar projects from rooftops to utility-scale. Solar manufacturing probably accounts for fewer than 5,000 US jobs, not counting workers in US owned factories overseas.

It should be no surprise that BP has finally decided to get out completely.

Paul Ausick

Filed under: Alternative Energy, Green Biz Tagged: BP, FSLR, JASO, LDK, SPWR, STP, TSL

First Solar Lowers Outlook, Cuts Jobs (FSLR, TSL, YGE, LDK, JASO)

Paul Ausick — Wed, 14 Dec 2011 16:18:39 +0000

Thin-film solar panel maker First Solar Inc. (NASDAQ: FSLR) has conceded the inevitable. The company this morning lowered its sales and profit outlook for this year, announced it would cut 100 jobs, and offered relatively modest guidance for 2012. The announcement has hit the shares of Chinese competitors like Trina Solar Ltd. (NYSE: TSL), Yingli Green Energy Holding Co. Ltd. (NYSE: YGE), LDK Solar Co. Ltd. (NYSE: LDK), and JA Solar Holdings Co. Ltd. (NASDAQ: JASO).

First Solar lowered 2011 sales from $3-$3.3 billion to $2.8-$2.9 billion and cut its profit estimate from $6.50-$7.50/share to $5.75-$6.00/share. The company attributed the drops to “continued delays of certain projects in First Solar’s systems business due to weather and other factors.”

One of those other factors has got to be the explosion of manufacturing capacity for solar PV panels and the concomitant drop in panel pricing. Another is the looming expiration of a tax grant program in the US, which threatens to curb new projects going forward.

For 2012, First Solar guided revenue of $3.7-$4 billion, lower than a consensus estimate of $4.06 billion. The company estimates EPS of $3.75-$4.25, where analysts have been projecting EPS of $7.46.

First Solar also says it is altering its business model, according to the company’s CEO:

[W]e are recalibrating our business to focus on building and serving sustainable markets rather than pursuing subsidized markets. By channeling our core strength in utility-scale PV systems to markets with immediate need for mass-scale renewable energy our goal is to earn substantially all of our new revenues from sustainable markets by the end of 2014.

What he means is that rather than aim at large utility-scale projects that look set to lose their federal incentives, First Solar is going to go after the residential and commercial rooftop solar installation market. That market has finally discovered a financing scheme that does not depend on subsidies, relying instead on bank financing and power purchase agreements for profits.

Whether or not First Solar can make this transition remains to be seen. To help the process along, the company has appointed a new president of global business development. There’s also a shakeup in First Solar’s finance team, where the chief accounting officer will be leaving on May 1st.

First Solar shares are getting pounded this morning, down nearly -21% at $33.72, a new 52-week low.

Paul Ausick

Filed under: Alternative Energy, Earnings Warning, Green Biz Tagged: FSLR, JASO, LDK, TSL, YGE

24/7 Wall St. Closing Bell (LULU, CLF, DPZ, WNR, SINA, GES, BIG, ZUMZ, RY, BNS, YRCWD, WDC, RIMM, THC, JASO)

Paul Ausick — Fri, 02 Dec 2011 21:12:02 +0000

Stocks got off to a good start this morning following the Labor Department’s report on non-farm payrolls, up slightly less than expected at 120,000 new jobs, and an unexpected drop in US unemployment from 9% to 8.6%. Also supporting prices this morning was news that the European Central Bank would lend 100-200 million euros to the IMF to hand out to debtor nations in the Eurozone. Gains peaked in the early morning and have remained up only modestly since about noon. The dollar strengthened against both the euro and the yen, keeping gains for both crude oil and gold at under 1%. Crude oil is trading at $100.83/barrel and gold is trading at $1,747.10/ounce just before today’s close.

The unofficial closing bells put the DJIA down less than 1 point to 12,019.42 (-0.01%), the NASDAQ rose less than 1 point (0.03%) to 2,626.93, and the S&P 500 fell 0.02% or less than 1 point to 1,244.28. Folks, that’s flat!

There were several analyst upgrades and downgrades today, including Lululemon Athletica Inc. (NASDAQ: LULU) raised to ‘buy’ at KeyBanc. Other ratings action Cliffs Natural Resources Inc. (NYSE: CLF) raised to ‘outperform’ at Credit Suisse; Domino’s Pizza Inc. (NYSE: DPZ) started as ‘hold’ at KeyBanc; Western Refining Inc. (NYSE: WNR) raised to ‘outperform’ at Credit Suisse; Sina Corp. (NASDAQ: SINA) raised to ‘buy’ at Deutsche Bank; and Guess? Inc. (NYSE: GES) cut to ‘neutral’ at Citigroup.

Here are today’s big post-earnings news reactions with prices during the last half-hour of trading:
Big Lots, Inc. (NYSE: BIG) is down -8.6%% at $36.34; Zumiez Inc. (NASDAQ: ZUMZ) is up 23.9% at $28.95; Royal Bank of Canada (NYSE: RY) is up 3.4% at $47.82; and Bank of Nova Scotia (NYSE: BNS) is down -3.1% at $48.08.

Several other standouts from today are as follows…

YRC Worldwide Inc. (NASDAQ: YRCWD) is up 29.7% at $12.61. The freight hauler concluded a 1-for-300 reverse split that drove the share price to $9 from $0.03.

Western Digital Corp. (NYSE: WDC) is up about 7% at $31.30. The computer disk drive maker announced that it was resuming operations at one of its flooded Thai plants and raised its revenue estimate for the current quarter. More details here.

Research in Motion Ltd. (NASDAQ: RIMM) is down about -9.6% at $16.79. The smartphone and tablet maker announced an inventory writedown of $485 million for unsold PlayBook tablets and said that full-year earnings would be lower. Detailed coverage here.

Tenet Healthcare Corp. (NYSE: THC) is down more than -10% at $4.20. The health care facilities operator likely is suffering from a lowered target price from BMO Capital Markets with rating of ‘market perform’.

JA Solar Holdings Co. Ltd. (NASDAQ: JASO) is down nearly -7% at $1.74. The solar PV maker is likely giving back gains made over the past two days. The was little reason for the gain in the first place, so that investors are taking it back should be no surprise.

Stay tuned for Monday. We have noted a speech due from Chicago Federal Reserve President Charles Evans and short-term Treasury bill auctions in the morning. Here are other noteworthy events scheduled for Monday (all times Eastern):

10:00 a.m. – Census Bureau factory orders report
10:00 a.m. – Industrial Supply Management non-manufacturing index

Have a great weekend.

Paul Ausick

Filed under: HI/LOW, Market Close Tagged: BIG, BNS, CLF, DPZ, GES, JASO, LULU, RIMM, RY, SINA, THC, WDC, WNR, YRCWD, ZUMZ

ITC Keeps Investigating Chinese Solar Players (FSLR, SPWRA, TSL, JASO, LDK)

Administrator — Fri, 02 Dec 2011 18:06:32 +0000

Solar stocks can use all the help available, and news is out today that may help the ailing U.S.-based solar sector. The industry has complained of China’s solar firms dumping solar cheap panels and the U.S. International Trade Commission has just come out in favor of U.S. solar companies.

The ITC bulletin noted that it has “made affirmative determinations in its five-year (sunset) reviews concerning Crystalline Silicon Photovoltaic Cells and Modules from China. The USITC vote noted “Preliminary phase antidumping and countervailing duty investigations: Crystalline Silicon Photovoltaic Cells and Modules from China, Inv. Nos. 701-TA-481 and 731-TA-1190 (Preliminary)” today as the ITC sees threat or injury to U.S. solar firms from Chinese companies.

Seven US solar PV makers jointly filed the claim, but only the US unit of Germany’s SolarWorld was identified. Top US solar makers First Solar Inc. (NASDAQ: FSLR) and SunPower Corp. (NASDAQ: SPWRA) are not among the companies that signed on and no specific Chinese makers were identified in the complaint.

Leading makers like Trina Solar Ltd. (NYSE: TSL), JA Solar Holdings Co. Ltd. (NASDAQ: JASO), and LDK Solar Inc. (NYSE: LDK) are surely among the targets. As far as LDK Solar is concerned, we have noted that this company is mathematically bankrupt without a guarantee from China.

Today’s news is not a registered victory as the outcome (and damage awards) are not yet known, but it is an indication that the U.S. solar players may get some margin stabilization ahead.

JON C. OGG

Filed under: ADR, Alternative Energy, China, Green Biz, Law, Regulation, Utilities Tagged: FSLR, JASO, LDK, SPWRA, TSL

24/7 Wall St. Closing Bell (HD, GMCR, NFLX, STP, RIG, CPN, AEO, JOSB, SDRL, ARO, KKD, ZOLT, AATI, PCX, AVL, JASO, SFLY)

Paul Ausick — Wed, 30 Nov 2011 21:07:58 +0000

Strong reports from the Chicago purchasing managers index and pending home sales juiced the equity markets this morning, and the gains held up throughout the day. Part of the bounce is due to a lowering of China’s capital reserves requirements on its banks and to a weaker dollar. Crude oil prices rose nearly 2% this morning, but the EIA report of a large inventory increase sent prices back down by mid-morning. WTI crude is trading at $100.27/barrel, after posting a high this morning of $101.75/barrel. Gold is up sharply, at $1,745.30, a rise of nearly 2%. The three major indexes have all been trading more than 3% higher for virtually the whole day.

The unofficial closing bells put the DJIA up nearly 489 points to 12,044.55 (4.23%), the NASDAQ rose nearly 105 points (4.17%) to 2,620.34, and the S&P 500 rose 4.33% or nearly 52 points to 1,246.94.

There were several analyst upgrades and downgrades today, including Home Depot Inc. (NYSE: HD) reiterated as ‘buy’ with a $46 price target at Argus. Other ratings actions included Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR) reiterated as ‘buy’ with a $94 price target at Canaccord Genuity; Netflix, Inc. (NASDAQ: NFLX) cut to ‘underperform’ at Wedbush; Suntech Power Holdings Co. Ltd. (NYSE: STP) reiterated as ‘hold’ at Argus; Transocean Ltd. (NYSE: RIG) cut to ‘hold’ at Argus; and Calpine Corp. (NYSE: CPN) cut to ‘hold’ at Jefferies. See our story on Transocean’s stock offering and proposed debt offering.

Here are today’s big post-earnings news reactions with prices during the last half-hour of trading: American Eagle Outfitters Inc. (NYSE: AEO) is up 3.3%, at $13.87; The Fresh Market, Inc. (NASDAQ: TFM) is up 5.7%, at $38.73; Jos. A. Banks Clothiers, Inc. (NASDAQ: JOSB) is down -6%, at $48.09; and SeaDrill Ltd. (NYSE: SDRL) is up 6.3%, at $34.82. After markets close today, Aeropostale, Inc. (NYSE: ARO) and Krispy Kreme Doughnuts Inc. (NYSE: KKD) will report earnings.

Several other standouts from today are as follows…

Zoltec Companies, Inc. (NASDAQ: ZOLT) is up 41.5%, at $8.11. The advanced materials maker reported better-than-expected earnings after markets closed yesterday.

Advanced Analogics Technologies, Inc. (NASDAQ: AATI) is up 32.5%, at $5.75. The power management chip maker is being acquired by Skyworks Solutions Inc. (NASDAQ: SWKS) for $258.6 million, or about $6.05/share.

Patriot Coal Corp. (NYSE: PCX) is up 18.7%, at $10.30. This coal miner, like virtually all its competitors, is down about -40% for the past 12 months. There’s no news to justify today’s price jump, but the company’s thermal coal does sell well in cold weather.

Avalon Rare Metals Inc. (AMEX: AVL) is up 20.3%, at $3.26. The rare earths miner made this big move on no news, but competitor Molycorp Inc. (NYSE: MCP) did a deal with two Japanese companies to manufacture very powerful magnets in Japan for use in wind turbines and other high-tech products.

JA Solar Holdings Co. Ltd. (NASDAQ: JASO) is up 16.6%, at $1.80. The solar PV maker is among several Chinese solar companies moving up today, no doubt as these are considered the most likely to survive a shakeout in the solar manufacturing sector.

Shutterfly, Inc. (NASDAQ: SFLY) is down -12%, at $27.02, after posting a new 52-week low of $26.93 earlier today. The social media company is facing intense competition for its on-line photo products.

Stay tuned for Thursday. Here’s a list of other noteworthy events scheduled for tomorrow(all times Eastern):

8:30 a.m. – New unemployment claims
9:45 a.m. – Bloomberg consumer comfort index
10:00 a.m – Industrial Supply Management manufacturing index
10:30 a.m. – EIA natural gas weekly report
4:30 p.m. – Federal Reserve balance sheet
4:30 p.m. – Money supply report

Paul Ausick

Filed under: HI/LOW, Market Close Tagged: AATI, AEO, ARO, AVL, CPN, GMCR, HD, JASO, JOSB, KKD, NFLX, PCX, RIG, SDRL, SFLY, STP, ZOLT

Top Analyst Upgrades & Downgrades (AET, BIG, CIT, FMCN, GILD, JASO, LDK, MDR, MU, SNH, VE, INT)

Administrator — Wed, 23 Nov 2011 13:02:43 +0000

These are some of Wednesday’s top analyst upgrades, downgrades, and initiations seen from Wall Street research calls.

Aetna, Inc. (NYSE: AET) named Bull of the Day at Zacks.
Big Lots Inc. (NYSE: BIG) Cut to Equal-Weight at Barclays.
CIT Group Inc. (NYSE: CIT) Started as Hold at Jefferies.
Focus Media Holding Ltd. (NASDAQ: FMCN) Cut to Neutral at JPMorgan.
Gilead Sciences Inc. (NASDAQ: GILD) Cut to Hold at Argus.
JA Solar Holdings Co., Ltd. (NASDAQ: JASO) Cut to Sell at ThinkEquity.
LDK Solar Co., Ltd. (NYSE: LDK) Cut to Sell at ThinkEquity.
McDermott International (NYSE: MDR) named as Bear of the Day at Zacks.
Micron Technology Inc. (NASDAQ: MU) Raised to Buy at Citigroup.
Senior Housing Properties Trust (NYSE: SNH) Raised to Buy at Stifel Nicolaus.
Veolia Environnement S.A. (NYSE: VE) Raised to Overweight at HSBC.
World Fuel Services Corporation (NYSE: INT) named value stock of the day at Zacks.

JON C. OGG

Filed under: Analyst Calls Tagged: AET, BIG, CIT, FMCN, GILD, INT, JASO, LDK, MDR, MU, SNH, VE

LDK Solar, Mathematically Bankrupt Without China (LDK, YGE, STP, TSL, JASO)

Paul Ausick — Tue, 22 Nov 2011 17:05:56 +0000

Following the terrible earnings reports just out from a half-dozen of China’s largest solar PV makers, it is mathematically possible that at least one of these companies is at the edge of the bankruptcy precipice. LDK Solar Co. Ltd. (NYSE: LDK) is burning cash and the company’s outlook for the current quarter and the 2011 fiscal year are not encouraging.LDK Solar reported $636 million in cash and equivalents at the end of the second quarter.

At the end of the third quarter, cash and equivalents had fallen by $373 million, to $263 million. Short-term borrowings and payments due on long-term debt rose by $140 million, from $2.21 billion to $2.35 billion. The company also had negative cash flow for the quarter, with negative gross profit of $17 million and a loss from operations of $77 million. Does any of this assure an imminent bankruptcy filing? No. This company is one which many consider as being “protected by China.” Still, financial math is financial math.

Here’s what the CEO had to say in the earnings release: Weak market demand and rapidly declining average selling prices throughout the solar supply chain resulted in shipment volumes and revenues lower than what we previously anticipated. While we continue to believe that the significant opportunities to meet global energy needs with solar power will drive long-term market growth, in the near-term we expect challenging conditions in the solar industry to continue. As such, we remain focused on strengthening our balance sheet, increasing our operating efficiencies and improving our cost structure.

How exactly does the company plan to strengthen its balance sheet? To increase its operating efficiency, it probably needs to fire people. That won’t go down well. Cutting production might not help either. How it can improve its cost structure is equally mysterious, given that prices for solar modules continue to decline.

However the company does have a potential ace in the hole. Last September, LDK received a loan package worth $8.9 billion from China Development Bank (CDB) to be used for “long-term growth initiatives and corporate development plans.” LDK was one of several solar and wind-turbine makers to receive a total of $47 billion in what are essentially credit lines from the CDB. According to a recent report from Bloomberg, LDK has drawn on none of that line of credit, although solar makers Yingli Green Energy Holding Co. Ltd. (NYSE: YGE), Suntech Power Holdings Co. Ltd. (NYSE: STP), Trina Solar Ltd. (NYSE: TSL), JA Solar Holdings Co. Ltd. (NASDAQ: JASO), and wind-turbine maker Xinjiang Goldwind have drawn just $866 million to date.

Under the terms of the CDB’s credit lines, a company needs to apply for a loan for a specific project, and the intention when the lines were approved was certainly to grow manufacturing capacity. Interest rates were also high — more than 6.5% according to the Bloomberg report.

At one time, it might have been conceivable that LDK would apply for a loan for what are known as “general corporate purposes” to get it through this rough patch. But given the recent trade case filing against China’s solar makers by a group of US solar makers, if the CDB goes ahead with such a loan, the US solar makers would certainly scream and the US Trade Representative could easily rule in their favor.

China would probably like to avoid that in a perfect world and LDK could in theory be put in the position of taking one for the team. That is, the CDB and the government would let LDK fail just to show that there is nothing funny going on in the country’s solar industry. One possible way for China to dodge either an outright bailout or a bankruptcy of one of its showpiece companies would be to lend money to one of LDK’s competitors for the purpose of acquiring LDK. How or even if those funds would show up on the acquiring company’s balance sheet is anyone’s guess.

LDK’s market cap is currently around $400 million, long-term debt totals about $980 million, and shareholder equity is around $1.2 billion. Under any bankruptcy or reorganization scenario — except the improbable one of LDK pulling out of this mess on its own – shareholders would likely receive nothing.

We do want to stress one thing here and that is that with this being effectively under China it may not ever come about that the company is really forced to file for bankruptcy. Many companies, even in America, manage to avoid filing for bankruptcy for years and years when they are mathematically bankrupt or insolvent. Asensio used to blast LDK but we have not heard much from him of late. Strange things happen in China, and solar “finances” do not avoid that characteristic.

Paul Ausick

Filed under: Accounting, Alternative Energy, Bankruptcy, China, Green Biz Tagged: JASO, LDK, STP, TSL, YGE

Solar Reality… The Sun Just Does Not Shine (STP, LDK, CSIQ, TSL, JASO, JKS)

Paul Ausick — Tue, 22 Nov 2011 14:16:55 +0000

The solar PV sector has been struggling for the last two or three quarters as manufacturing over-capacity has driven down module pricing by around 40% since the beginning of the year. China’s top solar makers are getting beaten up, perhaps even worse than their US counterparts.

Six Chinese solar makers reported earnings after markets closed last night and before they opened again this morning: Suntech Power Holdings Co. Ltd. (NYSE: STP), LDK Solar Co. Ltd. (NYSE: LDK), Canadian Solar Inc. (NASDAQ: CSIQ), Trina Solar Ltd. (NYSE: TSL), JA Solar Holdings Co. Ltd. (NASDAQ: JASO), and JinkoSolar Holding Solar Co. Ltd. (NYSE: JKS). Every one of the six performed much worse than already poor expectations. Here’s the litany of third-quarter failure:

Suntech posted an EPS loss of -$0.64 on revenue of $810 million. The consensus estimate called for an EPS loss of -$0.64 on revenue of $776 million. Gross margin was 13.3% in the quarter, and the company expects that to fall to a range of 9%-11% in the fourth quarter. The company lowered its full-year shipment guidance from 2,200 megawatts to 2,000 megawatts.

LDK Solar posted an EPS loss of -$0.87 on revenue of $472 million. The consensus estimate called for an EPS loss of -$0.46 on revenue of $515 million. Gross margin was -3.6% in the quarter, and the company expects that to rise to 2%-7% in the fourth quarter. The company lowered full-year module shipment guidance from 750-850 megawatts to 55–65 megawatts. LDK also revised wafer and ingot shipments downward.

Canadian Solar posted an EPS loss of -$1.02 on revenue of $500 million. The consensus estimate called for an EPS loss of -$0.39 on revenue of $497 million. Gross margin was 2.4% in the quarter, and the company expects that to rise to 5%-8% in the fourth quarter. The company reiterated its full-year shipment guidance of 1,200-1,300 megawatts.

Trina Solar posted an EPS loss of -$0.45 on revenue of $482 million. The consensus estimate called for an EPS loss of -$0.09 on revenue of $440 million. Gross margin was 10.8%, and the company expects gross margin of about 10% in the fourth quarter. The company lowered its full-year shipment guidance from 1,750-1,800 megawatts to 1,400 megawatts.

JA Solar posted an EPS loss of -$0.36 on revenue of $388 million. The consensus estimate called for an EPS loss of -$0.01 on revenue of $379 million. Gross margin was -4.3%, and the company did not provide an estimate for fourth quarter gross margin. The company reduced its full-year shipment guidance from 1,800 megawatts to 1,600 megawatts.

JinkoSolar posted an EPS loss of -$0.47 on revenue of $279 million. The consensus estimate called for EPS of $0.18 on revenue of $272 million. Gross margin was 3.7%, and the company did not provide an estimate for fourth quarter gross margin. Its project for fourth quarter revenue is $180-$210 million.

To declare today an unmitigated disaster for the Chinese solar makers may be understating the case. The companies that are predicting a higher gross margin the current quarter are probably dreaming, and the two companies that did not offer an estimate of fourth-quarter margins (JA Solar and JinkoSolar) undoubtedly face margins so low that they are embarrassed to discuss them.

There will be blood in the streets from these stocks again this morning. That does not mean that this is a particularly good buying opportunity, however. Failures and consolidations in the Chinese solar PV industry have got to be just around the corner. For the past 12 months, every one of these companies’ share price is down at least -70%.

In this morning’s pre-market, JinkoSolar shares are down the most, -12%, at $5.02 in a 52-week range of $4.55-$32.21. LDK shares are down more than -4.5%, at $2.70, in a 52-week range of $2.55-$14.97. Trina Solar is down nearly -4%, at $5.99, in a 52-week range of $5.28-$31.08. JA Solar is down more than -90%, to $1.38, a new 52-week low if it holds. JA Solar’s current 52-week range is $1.46-$8.57. Canadian Solar is down about -4.5%, at $2.10, also a potential nerw 52-week low. The company’s current range is $2.16-$16.79. Suntech shares have not moved yet this morning.

Paul Ausick

Filed under: Alternative Energy, Earnings, Green Biz Tagged: CSIQ, JASO, JKS, LDK, STP, TSL