Evergreen Solar Inc on Thursday reported quarterly results that fell short of expectations as prices on solar panels fell and it recorded high costs for ramping up a new manufacturing facility, sending shares down 10 percent in extended trade.
Evergreen also warned that a global economic downturn and weak credit markets would hurt demand for solar products in the first half of this year and said it was seriously considering subcontracting some manufacturing to save on capital costs.
"We have a fair amount of confidence that we will come up with something that makes a lot of sense, but we don't have a deal yet," Chief Executive Richard Feldt said on a conference call with analysts. "This is not a way of cheapening anything, it's just a way of reducing costs."
Subcontracting manufacturing of solar cells and panels would reduce the company's capital needs for its next factory, planned for Asia, by about 75 percent, Evergreen said.
"They are trying to make some hard calls here, in terms of scaling the business, that are a little bit more reflective of reality," Wedbush Morgan analyst Al Kaschalk said. "But let's face it, though. The credibility is still not there that there is a legitimate business model that is going to ultimately work as a stand-alone company."
Evergreen, based in Marlboro, Massachusetts, makes photovoltaic solar equipment that turns sunlight into electricity. The company expects to sell about 130 megawatts of solar products this year, it said.
PRICES DROPPING
Strong demand for clean solar power was a bright spot in an otherwise dour U.S. economy for much of last year. At the end of 2008, however, frozen credit markets stalled financing for solar projects, causing shares of solar companies to plummet and raising worries that the industry's annual growth rate of 50 percent would falter this year
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