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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

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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