At its analyst day held last week, semiconductor and solar
MEMC Electronic Materials Inc.
) provided its financial outlook for first quarter of 2013 and
fiscal 2013. The company also announced its plans to change its
name to 'SunEdison', subject to shareholder approval. MEMC
believes that the new name would better represent both the
businesses under a global brand name.
MEMC expects the first half of 2013 to remain sluggish. The
second half is expected to gain momentum based on industry
recovery. MEMC expects Semiconductor revenues in the range of
$228.0-$235.0 million for the first quarter and $940.0-$990.0
million for fiscal 2013. The company expects to sell 10-38 solar
energy systems in the first quarter of 2013 and 420-490 in fiscal
2013. The guidance came below the Street's expectations mainly
due to muted project development spending in 2012 and and
expectations of a soft first half of 2013.
MEMC also intends to stabilize the sequential volatility in
megawatt (MW) installations by expanding its service offerings
(for residential and small commercial projects) as well as
focusing on distributed generation. Management is keen to bring
down the cost per 400 watt project to $0.40 per watt from the
current cost of $0.65 per watt for a 330 watt project. However,
the company may face some challenges as the benefit of growing
volumes and lower cost of production will be offset by lower
pricing (from $3.79 per watt in 2012 to $3.10-$3.40 per watt).
The guidance was at par with management's announcement made
during the fourth quarter 2012 results. During the earnings call,
MEMC refrained from providing any quantitative revenue and EPS
guidance for the upcoming quarter and fiscal year to reflect the
ongoing uncertainty in the semiconductor and solar markets. But
management did mention that it is optimistic about gaining
operating leverage from ongoing cost reduction measures and
reduction in solar materials pricing, which in turn, would help
MEMC to deliver stronger results in 2013.
MEMC's semiconductor business has been hit hard by oversupply
issues and the dwindling PC market. Also, declining prices in the
solar industry have capped MEMC's growth in its solar business.
But the guidance, though not very strong, projects better
visibility in 2013.
Currently, MEMC has a Zacks Rank #3 (Hold). Investors may also
consider other technology stocks that are performing well.
Semiconductor Manufacturing International Corp.
PLX Technology Inc.
) all have a Zacks Rank #1 (Strong Buy) and are worth buying.
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