AstroPower Shares Tumble After Earnings Report

Shares of solar PV product manufacturer AstroPower, Inc. slid nearly 50 percent Friday during heavy trading following disappointing second quarter results released Thursday.

Newark, Delaware – August 6, 2002 [] Share prices started the day around US$14 on the Nasdaq exchange, dropping rapidly in a flurry of midday trading to a 52-week low of US$8.40 before closing at US$8.64. The stock traded as high as US$31.93 one year ago. AstroPower posted net income of US$365,000, or 2 cents per share for the quarter, compared with US$1.7 million, or 7 cents per share, a year earlier. Analysts, on average, had expected a profit of 11 cents per share, according to tracking service Thomson First Call. As a result of the lower than expected earnings, several financial analysts lowered their ratings for the company including Merrill Lynch, which dropped AstroPower from a Neutral to a Sell position, Wedbush Morgan, RBC Capital Markets, First Albany and Stephens Inc. Merrill Lynch analyst Christine Farkas said she reduced her earnings per share outlook for 2002 to 27 cents from 46 cents and for 2003 to 43 cents from 69 cents. “We believe near-term risk of geographic weakness, softer pricing, aggressive competition and higher costs will outweigh the longer-term industry growth at this time,” Farkas said in a research note. Dr. Allen Barnett, President and CEO of AstroPower, remained upbeat about the company’s future, despite the disappointing quarter. “Although we continue to show strong revenue gains year over year and remained profitable, we are disappointed with the results for this quarter,” Barnett said in a statement. “There were a number of external and internal factors that contributed to slower growth than planned. The German market got off to a very slow start this year.” The company’s Controller, Todd Greenspan said the company ended the quarter with an unexpected US$2 million in unsold inventory based on a customer changing an order late in the quarter. In the future, Greenspan said, AstroPower will build in more of a “cushion” of inventory to avoid similar situations. He said the company was essentially unaffected by the sudden drop in stock price. “We say this drop in stock price does not effect our business,” said Greenspan. “The only effect it would have is on ability to get cash through a stock sale – fortunately, we are in a position of having US$40 million in cash on the balance sheet.” Greenspan suggested that the drop in price may have been related to the current overall status of the stock market, which resulted in the sell-off. “I certainly think there was some overreaction, but I don’t think that it is unheard of in the environment Wall Street is in right now,” he said. AstroPower shares closed Monday at US$8.25. (Nasdaq: APWR)
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