Inventory Writedowns Beat down Solar Sector - LDK Solar (LDK) & Suntech Power (STP)

We expunged the last exposure to solar Friday [Feb 13: Closing LDK Solar] and frankly this solar sector has been a dog for a long while. [Feb 6, 2009: NYT - Dark Days for Green Energy] [Dec 20, 2008: BusinessWeek - Clouds Over the Solar Industry] The competition we thought would come a few years out [Jan 3, 2008: The Long Term in Solar] is here and combined with the credit issues, and global economic contraction it is ugly out there. After the bell last night, LDK Solar (LDK) lowered its guidance and announced a massive write off of inventory (>$200M!). This will throw their margins into the negative area and lead to losses. The stock was down 13% afterhours - it would not affect us much as we had just a tiny position but it's just a bad time out there in this group.

Suntech Power (STP) - the largest player in China also reported a not so inspiring earnings with inventory write downs as well. Guidance was also not something to hang your hat on.

•Chinese solar company Suntech Power Holdings Co Ltd (STP) posted a quarterly loss on Wednesday as prices and orders for its clean power products fell sharply.

•For the fourth quarter, the company posted a loss of $65.9 million, or 42 cents per American depositary share, compared with a year-earlier profit of $50.6 million, or 29 cents per ADS.

Labels: Earnings, solarstocks, STP, Suntech Power, Trina Solar, TSL

posted by Ertai at 1:09 PM