SunPower Reports Loss as Solar Farms Remain on Balance Sheet

  • Shifting strategy reduces revenue when projects go unsold
  • SunPower plans to sell plants to First Solar joint venture

SunPower Corp. posted a third-quarter loss as the second-biggest U.S. solar manufacturer opted to keep some power projects on its balance sheet instead of selling them.

The net loss was $56.3 million, or 41 cents a share, compared with profit of $32 million, or 20 cents, a year earlier, the San Jose, California-based company said in a statement Wednesday. Excluding some items, SunPower reported a profit of 13 cents a share, beating the average of 14 analysts’ estimates compiled by Bloomberg that called for a break-even quarter. Sales fell to $380.2 million from $662.7 million a year earlier.

SunPower’s earnings were affected by a strategic change. Instead of selling power plants to other companies, it now plans to shift many of them to 8point3 Energy Partners LP, a holding company formed this year with First Solar Inc. Some of those deals will close in the current quarter, and that timing drove down revenue in the third quarter, said Jeffrey Osborne, an analyst at Cowen & Co.

“Based on the construction schedule they will be retaining between 50 and 100 megawatts of projects on the balance sheet,” Osborne said in an e-mail Wednesday, before the results were released. “They will be dropped down into 8point3 in the fourth quarter.” He has the equivalent of a buy rating on the shares.

Tripling Revenue

Chief Executive Officer Tom Werner expects those sales will help triple revenue in the fourth quarter to as much as $1.3 billion. Revenue from these projects will become more obvious in the company’s income statement over the next few years, he said.

“It’s like selling projects to yourself,” he said in an interview Wednesday. “We need to get some quarters under our belt to show the quality of the revenue streams from the assets we’re feeding it.”

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