Earnings… Confusion Reigns at MEMC (WFR)

MEMC Electronic Materials, Inc. (NYSE: WFR) is one of those companies which seems to be just stuck between a rock and a hard place.  Tonight’s earnings will only reflect that further.  The materials maker for semiconductors wafers and solar wafers reported earnings of $0.06 EPS, but that figure includes items of $0.10 per share,versus a Thomson Reuters expectations of $0.09 EPS.   Revenues were $448.3 million versus $466 million expected from Thomson Reuters.

As far as 2010 guidance, MEMC expects to exceed its earlier revenue guidance of $1.75 billion to $1.85 billion, but it sees earnings below its previous guidance of $0.70 to $0.80 EPS.  Thomson Reuters has estimates of $0.66 EPS on revenues of $2.04 billion.  It sounds like margin pressure and we’ll see more data after the earnings conference call.

With shares off about 90% from the old highs, MEMC is a stock where the reaction can go either direction depending upon which way the wind blows on a given day.

So far, MEMC is a turnaround which has not been able to turn around.  The old hopes for a buyout were mostly tied to the notion that the stock was down so much from its peak.  Picking stocks solely on buyout hope is often dangerous, and all companies should be bought on the merits of the business not because shares are down considerably from their peak.

Shares closed down 2.1% at $11.26 in regular trading today, and the stock is down by 6.5% at $10.53 in the after-hours trading session.  Its 52-week trading range is $9.51 to $19.31.

JON C. OGG