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Global Woes Continue with LDK Solar's Quarterly Earnings

China's LDK Solar became the latest company to detail symptoms of the drag caused by oversupply and falling subsidies as it reported mounting losses for the fourth quarter of fiscal 2011.

The world’s second largest maker of solar wafers turned in another quarterly loss, and the numbers show how difficult 2011 was compared to the previous year. According to its earnings report, LDK’s loss from operations for the fourth quarter of fiscal 2011 was $531.4 million. In the third quarter of 2011, it reported a loss from operations of $77.1 million. Those numbers pale in comparison to the company’s income from operations of $203.8 million for the fourth quarter of fiscal 2010.

The operating margin for the fourth quarter of fiscal 2011 was negative 126.5 percent compared to negative 16.3 percent in the third quarter of fiscal 2011, and positive 22.1 percent in the fourth quarter of fiscal 2010. LDK’s net sales were the fourth quarter were $420.2 million, less than half of the volume from the same period a year earlier.

The company cited many of the forces blamed for the recent struggles of key players in the global solar industry.

"The solar industry experienced a tremendous supply and demand imbalance throughout the value chain during the fourth quarter. Our results reflected the negative effects of this dislocation in the PV market," said CEO Xiaofeng Peng. "Weak market demand and rapidly declining average selling prices reduced our revenue and adversely impacted our margins in the quarter.

"In 2012, we expect that excess capacity and further policy uncertainties in Europe and the U.S. will result in continued intense competition within the solar industry. As such, we remain focused on improving our cost structure by driving down production costs and closely managing our operating expenses.”

In its conference call later in the day, LDK addressed how the losses are impacting its workforce, which peaked at about 28,000 employees in July of last year. The company now employs 19,195 workers, with about 5,500 of those cuts coming since the end of 2011.

Shares dropped sharply on the earnings news early Monday but rebounded strongly in late-day trading, pushing well past $3. In 2007, LDK shares reached a high of more than $75.

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