Suntech Power Holdings Company Ltd.
) announced preliminary financial results for the third quarter
ended September 30, 2012.
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In the reported quarter, Suntech's shipments of photovoltaic (PV)
products declined by approximately 10% from the second quarter of
2012. Revenues in the third quarter of 2012 were approximately
$387 million, a sequential decline of 18%. This was also way
below the Zacks Consensus Estimate of $470 million for the
In the reported quarter, approximately 88% of revenues were
generated from the sale of PV modules, and 12% of revenues were
generated from the sale of PV systems, cells, silicon wafers and
Gross margin in the third quarter of 2012 was approximately 5%.
Gross margin benefited from the reversal of a prior provision for
anti-dumping tariffs and countervailing duties in the United
States of $18 million. This was partially offset by a $13 million
provision for purchase commitments related to long-term supply
In the third quarter of 2012, Suntech's operating expenses were
approximately $98 million. Operating expenses were impacted by $6
million of legal fees; $8 million in restructuring fees
associated with the reduction of PV cell production capacity and
headcount; and a $6 million impairment of intangible assets.
Wuxi, China-based Suntech is a leading solar energy company. The
company designs, develops, manufactures and markets photovoltaic
(PV) cells and modules.
Suntech expects shipments of PV products in the fourth quarter of
2012 to decline in a low single-digit percentage rate compared to
the third quarter of 2012. The gross margin in the fourth quarter
of 2012 is expected to be slightly negative. Suntech now expects
2012 annual PV shipments to be in the range of 1.7GW to 1.8GW,
compared to the previous guidance of 1.8GW to 2.0GW.
Suntech Power is one of the largest producers of PV solar modules
under its proprietary Pluto technology with a geographically
diversified customer base. Other positive factors for Suntech
include ongoing expansion programs, higher conversion efficiency
through its Pluto technology-enabled modules, subsidy program in
China, and improving operating efficiencies. However, the
positives are overshadowed by fears of tepid module demand in
Europe, rising competition, the volatile Euro and the financial
stability of its customers.
In the near term, the Zacks #3 Ranked (Hold) Suntech Power will
perform in line with the market. Over the longer run, our
'Neutral' recommendation on the stock indicates that it would
perform in sync with the broader market. This is in line with its
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