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No Surprise, LDK Tanks Q4 2011

April 30, 2012

Having pushed back the date on the earnings release along with several warnings issued by LDK Solar (LDK :NYSE) investors shouldn’t have been surprised that the company announced disappointing numbers for Q4 2011.

During Q4 2011, LDK reported net sales $420.2 million, an 11 percent decline from the previous quarter despite a 33 percent increase in the number of modules sold (255.5 megawatts (MW)) although the number of wafers sold dipped 33 percent (197.1). The decrease in net sales was blamed on the industry-wide problem of lower prices for polysilicon and the products produced from it.

LDK had revised its revenues to a range of $440 million to $520 million.

The news from LDK gets worse as the operating loss was an eye-opening $534.1 million, a 689 percent increase from the $77.1 million reported in Q3 2011 and far off the income of $203.8 million reported in the same quarter of the previous year. For this LDK blamed the deteriorating solar market forcing them to write-down inventory and existing sales contracts that they believed would not be fulfilled.

Gross loss for Q4 2011 was a staggering $275.2 million, a 1519 percent increase from the previous quarter. Net loss was $588.7 million or $4.63 per share, a 615 percent increase from previous quarter’s $114.5 million or $0.87 per share.

Investors can take some confidence in the fact that they are sticking with their fiscal year 2012 guidance of revenues in the range of $2.0 billion to $2.7 billion with PV system project production in the range of 400 MW to 600 MW and recognize between 270 MW to 360 MW of project sales and EPC services through third party clients. And with the stock down 31.7 percent since they announced the delay in earnings back in March, investors have been prepared for the worse.

But Q1 2012 is not going to be the home run investors would like as they are offering a revenue range of $190 million to $230 million for guidance.

Some investors must believe better days are around the corner as shares of LDK Solar were up 8.78 percent in late day trading. 

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