UPDATE 5-Suntech profit misses Wall St view, shares slump

* Q3 EPS 18 cents vs Wall St view 23 cents

* Buying 375 MW of ingot, wafer capacity

* Shares fall nearly 9 percent, hit lows from March 2009
(Updates stock prices)

By Matt Daily and Sarah McBride

NEW YORK/LOS ANGELES, Nov 17 (BestGrowthStock) – Photovoltaic solar
manufacturer Suntech Power Holdings Co (STP.N: ) Ltd’s
third-quarter profit (Read more your timing to make a profit.) fell short of Wall Street forecasts on
higher costs for silicon wafers and weaker selling prices,
sending its shares down nearly 9 percent.

China’s largest maker of the equipment that turns sunlight
into electricity also said it plans to acquire 375 megawatts
(MW) of polysilicon ingot and wafer slicing capacity for $127
million in a deal expected to add to earnings immediately after
it closes.

While solar demand is expected to reach record levels this
year, many analysts expect ever-increasing capacity to put
pressure on prices next year.

“That concern really started to permeate through markets
last week,” said Aaron Chew, an analyst at Hapoalim Securities
USA. The pressure has sent solar stocks down broadly, even for
companies that beat their earnings targets.

Chew expects the solar industry to lose about 3 gigawatts
of business next year as subsidies get slashed in places such
as the Czech Republic and Germany, the world’s biggest solar
market. Several companies, including First Solar Inc (FSLR.O: ),
have said their business in Germany could suffer next year as a
result.

Even though other markets are growing fast, it likely will
not be enough to offset the 3 gigawatts lost from those two key
European markets, Chew said. He anticipates total global demand
of around 15 gigawatts next year.

At Suntech, net income for the third quarter climbed to
$33.1 million, or 18 cents per American depository share (ADS),
from $30 million, or 16 cents per ADS, a year earlier.

Analysts’ average forecast was 23 cents per ADS, according
to Thomson Reuters I/B/E/S.

Revenue jumped 57 percent to $743.7 million, higher than
the $714 million analysts had expected.

Gross profit margin fell to 16.4 percent from 18.2 percent
in the second quarter as average selling prices for modules
slipped and the company’s costs for silicon wafers rose.

Those average selling prices will move slightly higher in
the fourth quarter, helped by strength in the euro, Chief
Commercial Officer Andrew Beebe told a conference call.

The company’s prices were to some extent hindered by
long-term selling contracts Suntech entered into months ago,
Chew said, a fairly common practice in the industry.

“When you see Yingli (YGE.N: ) report Friday, it will be the
same case,” he said, referring to the company’s smaller Chinese
rival, which will issue its quarterly figures later this week.

Suntech, which is on track to achieve 1.8 gigawatts (GW) of
installed cell and module production capacity this year, said
it was targeting 10 percent sequential growth in shipments for
the fourth quarter and expects to ship 1.5 GW for the year.

The company recently opened its first U.S. module
manufacturing plant, which will reach a capacity of 50 MW next
year, and it plans to team up with Calisolar Inc to produce
silicon in Ontario.

Suntech shares, which have dropped about 43 percent in the
past year, were down 8.6 percent, or 72 cents, at $7.62 on the
New York Stock Exchange. The shares fell as low as $7.46
earlier in the day, their lowest mark since March 2009.
(Reporting by Matt Daily and Sarah McBride; additional
reporting by Arup Roychoudhury in Bangalore; editing by John
Wallace, Derek Caney and Andre Grenon)

UPDATE 5-Suntech profit misses Wall St view, shares slump