Solar Power Maker Not So Bright (ENER, SPWRA, FSLR)

Energy Conversion Devices, Inc. (NASDAQ:ENER) reported its second quarter earnings before the market opened this morning. The company has  net income of $14.2 million (EPS of $0.33) on revenue of $103.1 million. Analysts had expected EPS of $0.31 on revenue of $101.82.

Where other solar device makers like SunPower Corporation (NASDAQ:SPWRA) and First Solar Inc. (NASDAQ:FSLR) have seen share prices deteriorate about 46% and 16%, respectively, Energy Conversion’s price at Friday’s close was virtually identical with it’s price 52 weeks ago.

A cloudy forecast, however, is more likely to affect Energy Conversion’s share price today. The company’s guidance for its third quarter, ending March 31st, is for revenue of $95 million to $110 million with consolidated gross margins of about 35%. For its full 2009 fiscal year, Energy Conversion expects total revenue of $395 million to $440 million. This outlook is far below guidance issued in August of $455 million to $485 million. The company’s president and CEO blames the “global economic downturn,” and points out that Energy Conversion’s risk factors include the availability of credit for its customers, many of which are builders of commercial and industrial buildings. That’s certainly reason to be concerned. In 2008, just one customer accounted for 23% of Energy Conversion’s sales.

The company’s shares are of 69% from the 52-week high of $83.33 reached this past summer.  It appears that there is no danger of topping that number anytime soon.

Paul Ausick
February 9, 2009