LDK Solar slumps on another contract termination
NEW YORK (AP) — Shares of LDK Solar Co. fell Wednesday after the company ended its second solar wafer agreement this month.
THE SPARK: LDK Solar, based in China, said it is ending an agreement with an unnamed European customer that was scheduled to last for 10 years. The customer will pay LDK Solar $37 million to terminate the contract. The company said it is assessing the effect of the move on its annual earnings.
The agreement was signed in 2008 and called for LDK to supply multicrystalline silicon wafers.
THE BIG PICTURE: LDK and its solar competitors have struggled this year amid weak demand and intense competition. In addition Washington has imposed hefty tariffs on government-subsidized Chinese companies, saying they have flooded the market with low-cost panels.
LDK announced a similar contract termination on Nov. 6. LDK said Sumitomo Corp. of Japan had agreed to end a solar wafer deal that was signed in September 2008 and was scheduled to end in 2016. Sumitomo agreed to pay LDK $33.4 million.
LDK Solar's revenue fell 14 percent in 2011, to $2.16 billion. Early this year the company said it expected $2 billion to $2.7 billion in revenue in 2012, suggesting its results might improve. It has since slashed that outlook. In September the company forecast full-year revenue of $1.1 billion to $1.5 billion.
Analysts expect LDK Solar to report $1.41 billion in revenue, according to FactSet.
The company also replaced its CEO and added five new directors to its board this month.
SHARE ACTION: Shares of LDK Solar lost 5 cents, or 4.7 percent, to $1.02 in midday trading. The stock reached a 52-week high of $6.92 in February and has lost 84.5 percent of its value since then.