First Solar Inc., the world’s largest maker of thin-film solar panels, reduced profit estimates for this year and next and said it will cut about 100 jobs as it shifts its focus to large-scale utility plants.
The company’s second restructuring in six weeks caused the stock to plunge 21 percent to its lowest price since February 2007. The shares have declined 74 percent this year, the largest drop in the Standard & Poor’s 500 Index. Most of the job cuts will occur at a research unit in California.
First Solar said global production of solar panels has tripled in recent years as more companies, including Chinese suppliers, enter the market. Government subsidies for solar power, especially in Europe, have declined as those nations have trimmed budgets in an economic decline, Chairman and Acting Chief Executive Officer Michael Ahearn said on a conference call today.
“I’m a little shocked” by the cuts to forecasted per-share earnings, said Mark Bachman, an analyst at Avian Securities LLC in Boston who has a “positive” rating on First Solar. “They severely handicapped next year’s numbers.”
Net sales this year will be $2.8 billion to $2.9 billion, down from Oct. 26 guidance of $3 billion to $3.3 billion, and profit will be $5.75 to $6 a share, down from $6.50 to $7.50, the Tempe, Arizona-based company said in a statement today.
Ahearn is counting on the utility-scale solar projects that it develops to drive sales of its panels, said Daniel Ries, an analyst at Collins Stewart LLC in New York.
First Solar can better forecast panel demand from its systems group, the unit that develops large projects using its own products, than in sales to other companies, Ries said yesterday in a note to clients.
He estimated panel sales to other companies will decrease 12 percent to about 1.1 gigawatts in 2012. “Several key First Solar customers have been weakened by” the poor economic climate.
First Solar dropped 21 percent to $33.45 at the close in New York, the most since Oct. 25 when the company announced that CEO Rob Gillette had stepped down and Ahearn had assumed his duties.
Three U.S. solar companies declared bankruptcy this year, including Solyndra LLC, which received $535 million in government loan guarantees.
Panel efficiency will increase to an average of 12.6 percent next year from 11.8 percent in the third quarter, the company said today in a presentation to investors.
That will help sell new large-scale projects to utilities that many states require to buy increasing amounts of power from renewable resources, said Paul Clegg, an analyst at Mizuho Securities USA Inc. in New York.
For 2012, First Solar expects sales in the range of $3.7 billion to $4 billion and profit of $3.75 to $4.25 a share. The company was expected to have revenue of $4.06 billion and profit of $7.46 a share, the average of 33 analysts’ estimates compiled by Bloomberg.
The company also plans to consolidate worldwide sales and project development under Jim Brown, who will be president of global business development. T.K. Kallenbach, president of the components business group, will leave Jan. 1. Chief Accounting Officer James Zhu is leaving May 1 and his role will be taken on by Chief Financial Officer Mark Widmar. The restructuring will result in fourth-quarter charges totaling 85 cents a share, including severance and impairment expenses.