The stock is trading at $22.77 up 9.34%.
FSLR Up 4% on Restructuring Despite Goldman Cut, Cratering Demand
Shares of solar energy technology provider First Solar (FSLR) are up 82 cents, or 4%, at $21.64 after the shares were briefly halted in pre-market trading just before the company announced it will restructure “in response to deteriorating market conditions in Europe,” shutting down its manufacturing facility in Frankfurt, Germany, and idling production in Kulim, Malaysia.
CEO Mike Ahearn said the company’s current production was too large to meet existing demand as subsidies have dried up in Europe:
After a thorough analysis, it is clear the European market has deteriorated to the extent that our operations there are no longer economically sustainable, and maintaining those operations is not in the best long-term interest of our stakeholders […] The solar market has fundamentally changed […] After a period of robust growth, First Solar is scaled to operate at higher volumes than currently exist following the reduction of subsidies in key legacy markets. As a result, it is essential that we reduce production and decrease expenses to reflect the smaller volume of high-probability demand we forecast.The company plans to lay off 2,000 people, or 30% of its staff.
The moves will cut expenses by $30 million to $60 million this year and by $100 million to $120 million annually in years to come, First Solar said. The company expects its cost to make solar modules to drop to 70 cents to 72 cents per watt this year, better than its prior estimate for 74 cents per watt, and to fall as low as 60 cents to 64 cents in 2013.
First Solar is to host a conference call to discuss the changes at 11 am, Eastern time. You can catch the webcast of it here.
In response, Auriga’s Hari Chandra Polavarapu this morning reiterates a Buy rating on the shares, and a $53 price target, writing, “We view the restructuring as a sensible and realistic response to dislocated market conditions in solar PV that are aided by fickle subsidy policies in Europe impacting demand, and abetted by asymmetric competition/subsidies on the supply side from China.”...MORE