News Article
First Solar Results Eclipsed By CEO Leaving
First Solar has reported financial results for the third quarter but the announcements are already overshadowed by the fiscal world's panic at the sudden announcement by the company that CEO Rob Gillette had left the immediately with no further explanation. The financial world has reacted very badly to the news so close to an earnings announcement leading to a great deal of speculation as to the reasons driving stock prices down 25%.
First Solar is seen as the thin film standard bearer and with recent failings of thin film based PV companies in the USA a great deal of pressure is riding on the company's success in the region. It is no secret that the company is not running at capacity and may need to begin lay offs in the near future to counter the slowing market. These factors have more to do with the current global over supply than any failings of the thin film sector.
Gillette has presided over a tumultuous time for the company with many previous managerial staff no longer at the company only increasing fears of a bigger problem. The company is not forthcoming with further information and will wait until the announcement later in the week. On a positive side news that Chairman and company founder, Mike Ahearn, is to serve as interim Chief Executive Officer until a replacement is found was met with general positive feedback demonstrating the respect Ahearn is given in industry circles.
In the results the net sales were $1,006 million in the quarter, an increase of $473 million from the second quarter of 2011. Quarterly net sales increased from $798 million in the third quarter of 2010. Third quarter net income per fully diluted share was $2.25, up from $0.70 in the second quarter of 2011 and $2.04 in the third quarter of 2010. Third quarter Cash and Marketable Securities increased $279 million quarter over quarter to $795 million.
"First Solar's performance in the quarter reflects our superior technology, strong execution capability, and integrated business model - all of which have enabled us to weather a difficult market environment relatively well," said Mike Ahearn, Chairman of the Board and Interim Chief Executive Officer of First Solar. "Going forward, our goal is not just to survive the current environment, but to transcend it by creating and expanding markets worldwide that do not depend on today's subsidy programs. This requires that we re-focus our strategy and commit our resources to solving the pressing energy needs that exist in much of the world."
With respect to Rob Gillette's departure, Ahearn said, "We thank Rob for his service, but the Board of Directors believes First Solar needed a leadership change to navigate through the industry turmoil and achieve our long-term goals."
First Solar's updated 2011 guidance is as follows:
"¢ Net sales of $3.0 to $3.3 billion
"¢ Operating Income of $650 to $760 million
"¢ Effective tax rate of 13% to 14%
"¢ Earnings per fully diluted share of $6.50 to $7.50
"¢ Manufacturing start-up expenses of approximately $35 million and factory ramp costs of $10 to $12 million
In preparation for 2012, the company is reducing capital expenditures and evaluating opportunities to reallocate overhead expenses to fund increased investments in market development, sales, and R&D.
