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SUNPOWER CORPORATION Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: August 9, 2011 09:57PM

SUNPOWER CORPORATION (SPWRB) filed Quarterly Report for the period ended 2011-07-03.



Highlight of Business Operations:

On April 28, 2011, we and Total, a subsidiary of Total S.A., a French société anonyme (“Total S.A.”), entered into a Tender Offer Agreement (the “Tender Offer Agreement”). Pursuant to the Tender Offer Agreement, on May 3, 2011, Total commenced a cash tender offer to acquire up to 60% of our outstanding shares of class A common stock and up to 60% of our outstanding shares of class B common stock (the “Tender Offer”) at a price of $23.25 per share for each class. The consummation of the Tender Offer was subject to customary closing conditions, including a minimum of 50% of the outstanding shares of each of the class A common stock and class B common stock being tendered, clearance by U.S. and European Union antitrust authorities, and other customary closing conditions.

Total Revenue: During the three and six months ended July 3, 2011, our total revenue was $592.3 million and $1,043.7 million, respectively, an increase of 54% and 43% from total revenue reported in each of the comparable periods in fiscal 2010. The increase in our total revenue during the three and six months ended July 3, 2011 compared to the same periods in fiscal 2010 was attributable to revenue related to the development of several large scale projects in North America and Europe, as well as the continuous growth of our third-party global dealer network in reaction to demand in the geographical regions in which we do business. In the three and six months ended July 3, 2011, we recognized revenue on 190.3 MW and 323.0 MW, respectively, of solar power products sold through both our UPP and R&C Segments as compared to 118.4 MW and 211.2 MW, respectively, sold during the comparable periods in fiscal 2010, representing an increase of 61% and 53%, respectively. The increase in our total revenue was partially offset by declining average selling prices and mix of our solar power products. We

Sales outside North America represented 37% and 45% of total revenue for the three and six months ended July 3, 2011, respectively, as compared to 66% and 68% for the three and six months ended July 4, 2010, respectively. The shift in revenue by geography in the three and six months ended July 3, 2011 as compared to the comparable periods in fiscal 2010 was due to increasing demand in the United States for our solar power products due to additional federal and state initiatives supporting attractive solar incentives within the residential, commercial and utility sectors, as well as a slowdown in project development and component shipments in Europe due to changes in government incentives.

UPP Revenue: UPP revenue for the three and six months ended July 3, 2011 was $302.4 million and $548.3 million, respectively, which accounted for 51% and 53%, respectively, of total revenue. UPP revenue for the three and six months ended July 3, 2011 increased 152% and 108%, respectively, as compared to the three and six months ended July 4, 2010 due to revenue related to large scale projects completed or under construction in North America and Europe, including projects acquired as part of our strategic acquisition in March 2010.

R&C Revenue: R&C revenue for the three and six months ended July 3, 2011 was $289.8 million and $495.3 million, respectively, or 49% and 47%, respectively, of total revenue. R&C revenue for the three and six months ended July 3, 2011 increased 10% and 6%, respectively, as compared to the three and six months ended July 4, 2010 due to growing demand for our solar power products in the residential and commercial markets, specifically in rooftop and ground-mounted commercial projects in North America, partially offset by the change in European government incentives which negatively influenced overall demand in and timing of customers' buying decisions in that region and by declining average selling prices.

During the three and six months ended July 3, 2011, total cost of revenue was $573.0 million and $935.9 million, respectively, which represented an increase of 93% and 64%, respectively, period over period. The increase in total cost of revenue partly corresponds with the increase of 54% and 43%, respectively, in total revenue during the three and six months ended July 3, 2011 compared to the three and six months ended July 4, 2010. As a percentage of total revenue, total cost of revenue increased to 97% and 90%, respectively, in the three and six months ended July 3, 2011 as compared to 77% and 78%, respectively, in the three and six months ended July 4, 2010. The increase in total cost of revenue as a percentage of total revenue is primarily due to: (i) a 61% and 53% increase in total MW of solar power products sold during the three and six months ended July 3, 2011, respectively, as compared to the respective periods in fiscal 2010, accompanied by an overall reduction in average selling prices of our solar power products period over period, and (ii) additional anticipated costs associated with the ramp up of AUO SunPower Sdn. Bhd's ("AUOSP") solar cell manufacturing facility ("FAB 3") which became operational in December 2010. Additionally contributing to the increase in total cost of revenue is $48.5 million in charges incurred in the second quarter of fiscal 2011 associated with the change in European government incentives, including (i) a $16.0 million write-down of project asset costs based on changes in fair value and our ability to develop, commercialize and sell active projects within Europe, and (ii) $32.5 million related to the write-down of third-party inventory and costs associated with the termination of third-party solar cell supply contracts resulting from lower demand and average selling price in certain areas of Europe.

Read the The complete Report



Stocks Discussed: SPWRB,
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