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LDK Solar (NYSE: LDK) Takes a Hit, Revises Outlook

Lowered Forecast for Third Quarter and Full Year

Written by Swagato Chakravorty
Posted September 18, 2012 at 3:29PM

The solar power industry has been struggling. Recently, Chinese solar manufacturing company LDK Solar Co. Ltd. (NYSE: LDK) stated that it’s in talks with possible investors even as it lowered sales forecasts.

The news saw LDK shares crater to a historic low of $1.18 on Monday. The NYSE-listed stock has lost roughly 75 percent of its value over just the past year. In general, a two-year slump in solar panel prices and large-scale profits erasure have been the most prominent consequences of the overproduction rampant in the sector.

On top of that, of course, the U.S. recently initiated anti-dumping measures against Chinese solar companies, and Europe is mulling over similar steps. That would be a serious setback, as Europe is the largest market for Chinese-made solar equipment.

Reuters reports:

"In the past few months we've had in-depth discussions with several companies and few of them have shown a significant interest in taking a strategic investment position in the company," he [LDK CEO Xiaofeng Ping] said, adding that the company had not received any offer yet.

LDK ended the second quarter of this year with $296.2 million in cash and equivalents, with $523.4 million in short-term pledged bank deposits. 2012 has been rough for LDK employees; more than 5,000 were let go with an additional 3,884 in the second quarter.

The main objections from Europe and the U.S. focus on heavy state-sponsored support that Chinese solar companies receive. In the second quarter, LDK stated that it had raised $50-$60 million through property sales and land use rights, but the end result was a $30.5 million loss.

Third quarter revenue is now estimated to lie between $220 to $260 million (down from an expected average of $453.6 million). Current quarter solar wafer shipments will likely be between 190 and 240 megawatts (down from second quarter shipments of 316.7 megawatts).

Full-year revenue is expected to be around $1.1 to $1.5 billion, down from $1.5-$2 billion, and quarterly net sales dropped to $235.4 million, a 53 percent drop.

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