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Enphase Offers Better Than Expected Loss But Is Losing CFO

August 8, 2012

Petaluma, California-based solar inverter manufacturer Enphase (ENPH :NASDAQ) delivered a better than expected adjusted loss for Q2 2012 due to a strong market in North America.

Revenues for Q2 2012 were $55.7 million, an 88 percent increase from the $29.6 million reported in the same quarter of the previous year and a 31 percent increase from $42.6 million generated in Q1 2012.

Gross margins continued to rise as the company stated 24.2 percent for Q2 2012, a solid bump from the 21.8 percent reported in the previous quarter and the 16.8 percent reported in the same quarter of the previous year.

The net loss for Q2 was $11.4 million or $0.29 per share. This doesn’t compare favorably to the Q2 2011 net loss of $10.3 million or $9.95 per share.

On a non-GAAP basis, the net loss for Q2 2012 was $7.3 million or $0.19 per share. Analysts had been expecting a loss of $0.32 per share.

Enphase touted its expansion in the United Kingdom but the real question is whether or not the company can expand its production to service the country and additional markets.

And with the CFO leaving Enphase, we guess the answer is that they do not have the financial resources to improve their production capabilities. The $66 million currently in cash and cash equivalents will not propel the solar inverter manufacturer to compete with the likes of Power-One (PWER :NASDAQ).

Seldom do you hear of CFOs leaving companies that are financially sound, especially one that has been publicly listed for less than one year. Despite the UK expansion and the introduction of the new Enlighten monitoring system, investors are bound to smell blood in the water and leave this stock in the short term.

Shares of Enphase were down 19.64 percent in midday trading while Power-One shares traded 1.62 percent higher.

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