SunPower Corp.'s shares tumbled by more than 30 percent Wednesday following the company's announcement that an unfavorable foreign exchange rate will likely reduce its earnings for the fourth quarter and next year.
The surging value of the U.S. dollar against the euro could reduce SunPower's fourth-quarter revenue by $17 million and its 2009 revenue by $50 million, the solar manufacturer said Tuesday. SunPower also expects its net income per share, excluding some items, to drop by 15 cents for the fourth quarter and 50 cents for 2009.
Europe is by far the largest solar market in the world, and a low-ranking dollar helps enable U.S. manufacturers to sell competitively in euros and still make good money in dollars. That dynamic could be changing as the dollar rises.
SunPower is the second solar company to warn that earnings could be impacted by the currency exchange rates. First Solar posted a 54 percent growth in its third-quarter profit last week. The company pointed to the dollar-to-euro exchange rate as a factor shaping its near-term earnings.
Shares of SunPower's Class A stock (NDSQ: SPWRA) closed at $32.99 per share, down nearly 35 percent. Its Class B stock (NDSQ: SPWRB) declined roughly 38 percent to close at $25.76 per share. The stocks had enjoyed double-digit gains before the company announced the revised forecast.
SunPower's announcement likely dragged down share prices for fellow solar companies as well. First Solar's shares dropped 14.33 percent to close at $152.09 per share Wednesday, while Evergreen Solar's stock fell about 17 percent to close at $4.39 per share. Shares of Suntech Power Holdings closed at $16.35 per share, down roughly 19 percent.
The Dow Jones Industrial Average also fell nearly 500 points Wednesday as investors dealt with news of layoffs at Goldman Sachs and uncertainty about how President-elect Barack Obama will work to rebuild the economy.
It's not unusual for companies to mention exchange rates in discussing their earning expectations. But solar companies are particularly vulnerable to changes in the value of the euro because so much of the market is in Europe.
SunPower also has become more vulnerable because it recently changed the currency used for certain European subsidiaries from dollars to euros as part of a new tax-planning strategy, the San Jose, Calif.-based company said.
The revised forecast predicts fourth-quarter revenue of $388 million to $418 million, with earnings of between 24 cents and 31 cents per share and a gross margin of 24 to 25 percent. For 2009, SunPower expects to earn revenue of $2 billion to $2.1 billion, with earnings of $1.68 per share.
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