Well, I guess the streak had to end sometime. SunPower (NASDAQ:SPWRA) (NASDAQ:SPWRB) exceeded my expectations the past two quarters, both in the deflationary fall, and again in January. Now, somewhat out of left field, we've got an earnings miss by the formidable solar power player.
Remember when First Solar (NASDAQ:FSLR) noted on its last conference call that things had "never looked more difficult"? This is the ugly face of that solar freeze.
This stumble, in which SunPower has reported both a small loss for the quarter and a reduced outlook for 2009, is definitely not occurring in isolation. Energy Conversion Devices (NASDAQ:ENER) took a similar stumble last month. I can only imagine this is the first of a wave of weak reports in the solar space.
I won't dwell too much on the ugly numbers, but I'll note that revenue fell from over $400 million last quarter to just $214 million. As long as customers lack access to project finance, this is a seriously stunted solar shop. And it's one of the strongest in the space!
Like ECD, SunPower is pulling in its horns in response to these wretched conditions. Capital spending plans have been cut by $100 million, which will push a large part of the next Malaysian facility buildout into 2010. Also, some "basically complete" production lines will not be ramped up until demand bounces back, which will help free up working capital and cut back on depreciation expenses.
On the conference call, the company's new CFO -- brought on in part for his experience at Sempra Energy (NYSE:SRE) and other utilities -- backed away a bit from the prior regime's commitment to a certain target model for gross and operating margins. I'm not sure what that means going forward, but it's an interesting development to keep an eye on.
Ultimately, while current enthusiasm centers around Chinese players like Yingli Green Energy (NYSE:YGE) and Suntech Power (NYSE:STP) -- which saw big share-price pops thanks to some ambiguous stimulus plans -- I think SunPower's got pretty robust staying power in this seriously tough market. I will personally be watching safely from the sidelines, and am eager to see how its competitors stack up as the rest of the first-quarter reports roll in.
