Solar panels manufacturer Energy Conversion Devices
Let's take a look at how the company may perform for the rest of the year.
A look at the quarter
Revenue for the quarter fell 15%, to $73.1 million from $86.2 million in the year-ago period. The first half of 2011 has been daunting for the solar industry since subsidy cuts were announced by Germany and Italy, the two leading markets for solar products. This measure led to a fall in average selling prices of solar products.
Falling prices have had a profound impact on operating margins. The operating loss at Energy Conversion Devices almost doubled to $26.5 million in the quarter. Even as bigger players such as JA Solar
Slowdown in industry
The slowdown has deeply affected the financials of various companies. SunPower
The company slashed its production capacity in the quarter by a stupendous 84% from the previous one, which inflated its manufacturing costs to $3.40 per watt from $1.45 earlier. Hence, it has to chalk out a more competitive cost structure.
The silver lining
The company is diversifying its offering by integrating its products for domestic use; it previously specialized in commercial applications. This will certainly expand the addressable market to a considerable extent and probably result in higher revenue. The company is also looking toward expanding its business in North America, where it recently concluded the largest solar rooftop project in Ontario.
As far as cost control is concerned, the company is exploring technologies to deliver cost-efficient products. It looks to integrate its products into building materials and daily applications to drive down costs.
The Foolish takeaway
The stock has lost an incredible 82% of its value this year, and looks like it is rebounding after the announcement of development initiatives. However, I believe that until and unless those steps materialize, Energy Conversion will not be able to break the current range it is trading in.
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Harsh Chauhan doesn't own any shares in the companies mentioned in this article. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.