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MEMC Plunges After Cutting Forecast on Falling Solar Prices

MEMC Electronic Materials Inc., the No. 2 U.S. maker of polysilicon, fell the most in three months after lowering its earnings outlook for the full year because of an oversupply of the material used in solar panels.

The St. Peters, Missouri-based company plunged 11.7 percent to $5.10 at the close in New York trading, the biggest drop since Aug. 4.

The company forecast a net loss of 35 cents to 55 cents a share and sales of $2.7 billion to $3 billion for the year, according to a statement yesterday. Analysts had expected net income of 28 cents a share and sales of $3.35 billion, according to data compiled by Bloomberg.

MEMC has said prices for its solar wafers, made of polysilicon, fell “sharply” in the quarter. The oversupply of the material has also led to a decline in solar panel prices, contributing to the bankruptcies of U.S. solar companies such as Solyndra LLC, which received a $535 million loan guarantee from the U.S. Energy Department.

“You are competing against excess inventory,” said Hari Chandra Polavarapu, an analyst at Auriga USA LLC who rates the stock “hold.” “You are competing against excess capacity. That’s absolute madness.”

The company recorded a one-time charge of $56.4 million to write off goodwill in its solar materials unit.

MEMC said third-quarter losses, excluding certain one-time charges, were 22 cents a share, compared with income of 10 cents a share in the same period a year earlier. Analysts had expected net income of 13 cents a share, the average of 14 estimates compiled by Bloomberg.

The company’s net loss was $94.4 million, or 41 cents a share, in the quarter, compared with net income of $17.6 million, or 8 cents a share, in the same period a year ago. Sales rose 3 percent to $516.2 million.

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