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SunPower cuts sees Q2 losses ahead as solar panel margins dip

SunPower cuts sees Q2 losses ahead as solar panel margins dip

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SunPower, a solar panel manufacturer, said it will post a second quarter loss as its profit margins slide due to weak demand in Germany and Italy

SunPower, a solar panel manufacturer, said it will post a second quarter loss as its profit margins slide due to weak demand in Germany and Italy, two countries that have phased out subsidies.

The company projected second quarter revenue of $590 million to $595 million. That outlook was in line with Wall Street expectations. However, SunPower projected a non-GAAP loss of 19 cents a share to 20 cents a share. Wall Street was looking for a profit of 3 cents a share.

What happened? SunPower's gross margins collapsed. SunPower projected gross margins between 12 percent to 13 percent compared to its previous outlook of 15 percent to 17 percent. Wall Street was looking for gross margins of 16.18 percent, which was already down from 20.33 percent in the first quarter.

Under generally accepted accounting principles (GAAP) SunPower expects gross margins of 3 percent to 4 percent and a loss of $1.50 a share to $1.55 a share.

The company said in a statement
:

Preliminary second quarter results reflect a shift in product mix related to market conditions in Germany and recent policy changes in Italy.

Fortunately for SunPower, it has lined up a partnership with Total to expand into new markets and get better rates on investment capital.

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Larry Dignan

Editor-in-Chief

Editor-in-Chief Larry Dignan is editor-in-chief of SmartPlanet and ZDNet. He is also editorial director of TechRepublic. Previously, he was an editor at eWeek, Baseline and CNET News. He has written for WallStreetWeek.com, Inter@ctive Week, New York Times and Financial Planning. He holds degrees from the Columbia University Graduate School of Journalism and the University of Delaware. He is based in New York but resides in Pennsylvania. Follow him on Twitter. Disclosure