MEMC Posts First-Quarter Loss on Lower Wafer Prices

MEMC Electronic Materials Inc., (WFR) a maker of silicon wafers for solar modules and semiconductors, lost $9.6 million, or 4 cents a share, in the first quarter as prices declined and administrative expenses doubled.

The loss compared with a profit of $2 million, or 1 cent, a year earlier, St. Peters, Missouri-based MEMC said today in a statement. The company was forecast to earn 5 cents, the average estimate of 16 analysts compiled by Bloomberg. Sales more than doubled to $437.7 million.

Chief Executive Officer Ahmad Chatila increased throughput and shut down higher-cost factories to weather a slump in prices for solar-grade silicon and semiconductors. Marketing and administrative expenses rose to $62.2 million from $29.8 million a year earlier. Gross margin fell to 13.5 percent of sales from 14.9 percent in the fourth quarter.

“This is a big disappointment to anyone who thought prices were going higher,” said Gordon Johnson, an analyst at Hapoalim Securities in New York who has a “sell” rating on the shares. “They’re using pricing to gain market share and its squeezing margins.”

MEMC dropped 99 cents, or 6.2 percent, to $14.95 as of 5:44 p.m. in trading after the market closed. The earnings statement was released after the close of regular U.S. trading.

In regular trading on the New York Stock Exchange, the shares gained 67 cents, or 4.4 percent, to close at $15.94, up 17 percent for the year.

SunEdison Purchase

To increase sales of its solar components, MEMC on Nov. 20 bought system installer SunEdison LLC for $200 million in cash and stock. The unit’s first-quarter sales were $60.7 million on installations of 10.9 megawatts.

MEMC has said it will save about $10 million a year from the factory closings starting in the third quarter this year, and that savings will rise to about $55 million annually, beginning in the second quarter of 2011.

For the year, MEMC predicted that the addition of SunEdison solar projects will boost sales to more than the high end of its February forecast of $1.85 billion. Margins may come in lower than the 16 percent to 17 percent the company had expected.

(MEMC scheduled a conference call with analysts and investors at 5:30 p.m. New York time. To listen, go to the company’s Web site at http://www.memc.com.)

To contact the reporter on this story: Christopher Martin in New York at cmartin11@bloomberg.net.

To contact the editor responsible for this story: Dan Stets in New York at dstets@bloomberg.net.

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