Energy Conversion Devices, Inc. (NASDAQ: ENER) has made an announcement after the close that really is nothing better than an old fashioned earnings warning. The company also is lowering production levels and cutting costs via headcount and other consolidation. Everything you’d expect from the industry of the future, right?
The company is slowing the pace of its demand-driven production and expansion plan. It noted the present impact of credit availability on project flow in the global pipeline for photovoltaics as a result.
The company also withdrew its earnings guidance because of the current economy. It now believes that solar product revenue for its third quarter will be roughly the same as the period a year ago.
There will be a delay in its production and expansion via a two-week production hiatus effective March 22. The orders for its pending Battle Creek facility for equipment and the hiring of new employees will be postponed until demand improves.
It is consolidating some production from its Auburn Hills 1 facility into its newer Auburn Hills 2 facility. It notes that about 130 employees will be relocated, but this will result in a permanent reduction of approximately 70 positions from the remaining operations at Auburn Hills 1.
Shares closed down 3.6% at $18.43 today, and shares are now trading down under $17.00 in after-hours trading. Its 52-week trading range is $16.00 to $83.33.
It seems that even after an 80% sell-off that the magnitude of the bad news in the solar sector just is not getting priced into the stocks. Obama’s green energy press in the stimulus package was supposed to be a boom for these companies. Let’s just hope if they go to D.C. with hat in hand that they don’t fly on a private jet.
This also has shares of First Solar Inc. (NASDAQ: FSLR) trading down in after-hours trading. It was our single pick in alternative energy out of our Energy Stocks To Double picks, but that isn’t until by the end of 2010. We expect many more negative headlines in the sector just like this for a while.
JON C. OGG
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