PWER - Sector: Technology---Industry: Electronic Instr. & Controls

[setravis]

Research on Power-One Inc. and Suntech Power Holdings Co. Ltd. -- Shift to Solar Accelerating

Press Release Source: StockCall On Wednesday February 2, 2011, 8:19 am EST
JOHANNESBURG, SOUTH AFRICA--(Marketwire - 02/02/11) - www.stockcall.com/ offers investors comprehensive research on the diversified electronics industry and has completed analytical research on Power-One Inc. (NASDAQ:PWER - News) and Suntech Power Holdings Co. Ltd. (NYSE:STP - News). Register with us today at www.stockcall.com/ to have free access to these researches.

The shift to solar and alternative energy sources was bolstered recently by President Obama's State of the Union. The President opened on the subject of alternative energy and promised more funds and Federal support. He set ambitious goals and called for the reallocation of federal funds away from oil companies and into alternative energy companies. Visit www.stockcall.com/ to see how companies in this industry have grown over the past years and how they are expected to perform in the future.

www.stockcall.com/ is an online platform where investors doing their due-diligence on the diversified electronics industry can have easy and free access to our analyst research and opinions on Power-One Inc. and Suntech Power Holdings Co. Ltd.; investors and shareholders of these companies can simply register for a complimentary membership at https://stockcall.com/development/stockcall/page.php?name=register.html

Granted, political promises have been made before, but the latest effort seems to have more gravity, and was reflected in share prices of several companies in the Diversified Electronics industry. In addition to the promise of greater Federal aid, solar panel production is also on the rise as a result of increased demand. A recent announcement from Suntech Power Holding reflects this trend. The company revealed plans to up employment from 40 to 78 employees at its Arizona facility. Investors can register for free to access the research report on Suntech Power Holdings Co. Ltd. at www.stockcall.com/STP020211.pdf.

As demand for solar panels continues to strengthen, so does the need for intermediary technology that delivers power. Power One Inc. is a leading producer of inverters, capable of delivering alternating and direct current electricity. The company has quietly moved from 9th to 2nd in the photovoltaic inverter market in the last 2 years. Solar panels may be the face of solar power, but inverters are the backbone, and should not be overlooked by investors looking to capitalize on the shift to alternative energy. Investors can register for free to access the research report on Power-One Inc. at www.stockcall.com/PWER020211.pdf.

On the earnings calendar for this month in the Diversified Electronics industry, Power-One and Suntech Power Holdings will be delivering their financial results on February 3rd and February 21st respectively. Register now at https://stockcall.com/development/stockcall/page.php?name=register.html to have free access to our reports on the diversified electronics industry.

About StockCall.com
StockCall.com is a financial website where investors can have easy, precise and comprehensive research and opinions on stocks making the headlines.

Contact:
Contact Person:William T. [email protected]

[setravis]

Energy
Power-One CEO: $9 Shares Don't Make Sense...
NEW YORK (TheStreet) -- Shares of solar inverter company Power-One(PWER) dropped to less than $10 on Friday, after a 21% share decline. It's been an "up and to the right" period for Power-One, moving from as low as $3 in early 2010 to as high as $13 in the past 52 weeks.

Yet that upwards trajectory in Power-One shares has not exactly been a straight line, to say the least, and earnings day has been the trigger for Power-One to either skyrocket or sink, with nary a quarter in recent history that has seen a sideways earnings reaction.
When Power-One shares first passed the $10 mark after its second quarter earnings in July, analysts covering the solar inverter company suggested it was a good barometer for the health of the stock. Power-One shares slipped to $9.30 on Friday, after a weaker-than-anticipated 2011 outlook that included a host of "spooky" solar industry tells such as excess inventory and feed-in tariff declines. Nevertheless, Power-One CEO Richard Thompson remains confident that the bears -- some of whom make the claim that Power-One shares are going to $5 -- will be proven wrong.

TheStreet spoke with the Power-One CEO on Friday to get his take on the earnings, the earnings reaction, and the outlook for the solar inverter market in 2011.

TheStreet: In high-growth sectors such as the solar inverter market, it often comes down to gross margins for investors. Power-One delivered on margins in the fourth quarter at 40.7% -- a decline but one that was anticipated. Yet the company wouldn't provide guidance on margins for the first quarter, sticking with the long-term 40% margin target. We hear that a range of 36% to 38% for the first quarter would be a fair assumption given the excess inventory in the market. Is that fair?

Thompson: As a rule, we don't provide margin guidance. Modestly lower margins makes sense to me, given our manufacturing ramp costs that we've disclosed previously and the short-term inventory issue. If you think about the growth rate of the inverter market and hyper demand last year, inverter companies were running factories at 110%. We had great absorption even if it was offset somewhat by higher component prices due to supply constraints. This year, it's expected to be the opposite, with the loss of overabsorption somewhat offset by component cost reduction, but saying the overabsorption by materials savings offset is 100% is not practical.

TheStreet: It's the first quarter and 2011 revenue outlook that has taken its toll on shares. One analyst I spoke with gave Power-One credit for providing a full-year revenue guidance range, even if it disappointed. Yet analysts still ask why the 'radio silence' from Power-One, in terms of margin guidance, especially now?

Thompson: We've thought through this carefully. I, for one, would rather give no guidance, but with 15 analysts covering the company now, it's important that we give demand guidance. I didn't want to be silent on the year and first quarter, yet I haven't wanted to provide profitability guidance yet, and it will likely stay that way. The analysts are capable of making their own profit calculations.

TheStreet: Margins relate back to pricing, and with excess inventory, pricing has to decline. You said in the earnings call that pricing will only decline 8% to 10%, in line with your previous forecast. Yet IMS Research has predicted a decline of 10% to 15% in 2011, and given the excess inventory, why won't there be a fire sale with inverter companies dumping product on the market?

Thompson: Keep in mind that we didn't raise prices last year, and at the same time we found that the largest competitors were higher-priced than us. We were pricing 3% lower than the market, and given the hyper demand it's easy to understand why competitors raised pricing. Now, even if they reduce pricing by 5%, the real difference they have to make up is 8% to get to status quo with us, and that's hard to do successfully.
We are the category leader in profitability, and if competitors lower prices that hurts them more than us, but it's not good for the industry overall. I believe we remain in a leadership position, having negotiated pricing for this year with most of our customers and believe the industry is well within the range of 8% to 10% declines. We may experience more price concessions over time, and we still have to see how the markets behave, but even with the ramp of two new factories and a general pricing decline impacting margins, I think margins will be strong.

TheStreet: You mention that you've already negotiated pricing with customers, yet it's typical in solar that there is wiggle room for pricing to adjust based on market conditions. Is there wiggle room in the pricing you're already negotiated?

Thompson: Yes, these are not firm fixed contracts. These are indications from customers who plan to buy, and pricing is determined by the megawatt levels they share with us, but it's not a fixed commitment.

TheStreet: In your outlook, we could call it the unholy trinity of causes for the lower guidance -- bad weather, feed-in tariff declines, and excess inventory. Yet with a midyear FIT cut coming in Germany, and an expected cut in Italy, why would there not be a classic demand pull-in now, as opposed to FIT declines being a negative contributor to the revenue guidance missing the Street mark?

Thompson: Obviously countries have been changing, and not holding firm to their normal patterns, creating concern for us. We expect Germany perhaps to get more aggressive. It has jobs to protect and 5 gigawatts to 6GW is a likely market size in 2011. Basically, the feed-in tariff situation remains an unknown for us. We think we will be able to respond well if demand is pulled in, and we are lowering our lead times globally. So if we are wrong on the upside, we will be able to respond.
Yet also keep in mind that our numbers from the fourth quarter include a bubble of demand in the power solutions business. We shipped $15 million of past-due demand in the power business, and that's not repeatable, so we are losing 5% off the revenue number there. Inventory oversupply can cost as much as 10%, and normal seasonality due to the European winter 10% to 15%, so all those factors led to our view of $260 million to $290 million in first quarter revenue. We think we will be safely within that range, and we hope $260 million is the floor.

TheStreet: Winter weather in Europe is always discounted in Street models since the solar market is still Germany-dependent and German rooftops are full of snow this time of year. Even with a severe winter this year, shouldn't that already be more or less in the Street numbers?

Thompson: It's been a severe winter in Germany, but what's just as critical is the amount of rain in Italy, which together makes it more difficult and slows down the market.

TheStreet: No one on the Street or inside Power-One saw the excess inventory issue coming, even if IMS Research was predicting a glut in January. So if everyone got it wrong once, how can investors be comfortable with the idea that it will work itself out in four to six months, as you've guided?

Thompson: First, when IMS Research released its data in early January suggesting oversupply, we immediately went out to our customers. We literally walked to warehouses to make an estimate and verify the IMS numbers.
How the excess inventory rolls off customer by customer is a matter of their efficiency now. They need to complete installations and that's not clearly predictable. So we actually chose what we think is a longer period of time, and the working off of inventory could occur earlier than four to six months. This industry has increased tremendously over 2010, and I don't know if anyone knows the proper inventory level. I know customers were ordering to what they saw as unbridled demand and now we plan to respond to customer needs on a shorter time frame.

TheStreet: Italy is on the minds of all solar investors, especially after the recent release of the data from Italy indicating that 6GW of solar installations may have been on the ground in Italy in 2010. You referred to this data as 'suspect' in your earnings conference call. How so?

Thompson: Basically, I think applications got out of hand there, and we verified that through some customers, and through well-placed sources on the ground in Italy with knowledge of the utility industry. Six gigawatts is just way too high. We do expect Italy to take a more of German-like posture in regards to FITs, and change FITs by project type, for example, ground-mounted projects on arable land getting reduced to a different degree than the rooftop market, where more demand will be driven by FIT changes. That makes sense to us, and it would reflect Italy tailoring use of FIT dollars to satisfy the desires of the government, including protecting precious vineyards [Gordon Johnson, analyst at Axiom Capital, has noted in his research that Italy makes more money from wine-region tourism than doling out solar subsidies for projects on arable land].We still think Italy will grow 3GW to 4GW next year, though we would be pleased with 3GW as the leader in that market.

TheStreet: So everyone wants to know if there is any corollary for what you are seeing in the market and for the solar modules companies?

Thompson: I can't speak to the panel market as far as excess inventory or bad weather. The supply-and-demand dynamic means panel pricing should be down this year and stimulate more demand for field installations, and that's good for us.

TheStreet: You have a much greater focus on the U.S. and China this year as difference makers. How does the global solar growth story play out in 2011?

Thompson: Overall, we are looking at Europe, led by Germany, being down substantially. Germany's decline followed by France and the Czech Republic, all offset a bit by Italy, but the European market, which has been the largest for years, will be down for the industry. We expect to make up the difference in North America and China.

TheStreet: Some solar analysts remain concerned that the regulatory hurdles in the U.S. will lead to a slower growth rate than projected for the U.S. solar market. Is that a risk?

Thompson: Regulations in the U.S. are a risk, and we've heard words from President Obama that he wants to cut the red tape and achieve renewable energy goals, but we need to see action, not just talk. We think North America will be a 2GW market in 2011.
In China, they favor Chinese vendors first, but we already have a footprint there, and I feel we are an indigenous vendor in China. The bottom line is we need demand in several new markets. Take Australia, where the continuation of floods has slowed their solar market down. Queensland is where most of the solar installations occur and that's where the flooding is. So some things are stacked against us, but we're optimistic.

TheStreet: How would you rank the risks, in terms of the North American market not living up to billing, the risk of a pricing decline greater than anticipated, and the risk that the inventory excess takes longer to work off than currently estimated?

Thompson: Risk of regulatory slowdowns in the U.S. is hardest to predict. A pricing decline greater than our current view would be a second-level risk, and third on the list would be the oversupply taking longer than four to six months to work off. We think that's a very conservative view. Remember, we were conservative on 2010 and ended up above our original demand estimate, and had a conservative view after the demise of Spain for 2009, so this is a totally unpredictable industry, and perhaps we're being too conservative on 2011.

TheStreet: Some analysts have made the comment to us that Power-One shares are "dead money" right now, and investors won't be comfortable again until there is proof that the inventory excess is declining and the company is having success in the U.S. Is it a fair criticism of Power-One shares?

Thompson: Consensus earnings after our earnings announcement is at approximately $1.20, and a reasonable trading multiple provides much higher share price than today's. I believe we are undervalued, and I remain surprised at that with our great performance and how well we managed the growth. I recognize that we are newly profitable and the company has been a restructuring story for years, but in a few short years we invested in the right product line and took costs to the right level and carefully adjusted operating expenses and are building out our business, so I feel confident in the team here. To some extent the marketplace we have to survive in is dictated to us, and we believe we can do better than the competition.
Nine dollars a share doesn't make a lot of sense to me. I understand investors were disappointed and we are among the first to publish earnings in the sector, but look at how we trade relative to EBITDA. We are consistently profitable and just don't deserve this low multiple. On the other hand, I understand what investors are looking for, and we have to prove that we can be successful in North America, and at the time, there is stiffer competition and big cap companies coming into the inverter space, almost on a weekly basis, so we will see where it all leads.

TheStreet: Is this the shakeout year for the solar inverter companies?

Thompson: There are so many unknowns and some are not so bad. We will just have to wait and see what happens to the industry. There are 80 inverter companies and so maybe the top 15 survive. Can the rest show the balance sheet and bankability, and deliver the maintenance required over 5- to 10-year warranties and maintain service footprints globally? It could well be the shakeout year in inverters.

[setravis]

Power-One Rides Into a Perfect Storm...

Power-One (Nasdaq: PWER) is sort-of new to the solar power industry. I think it shows.

The company raised sales expectations sky-high three months ago after experiencing a tremendous growth quarter, sending the stock on a magic carpet ride over the past three months. Last night's earnings report just about erased all those gains overnight because Power-One clearly overestimated its own strength.

That's not to say that the quarter was entirely without merit. Sales jumped 157% year-over-year to $366 million, slightly above the $360 million top end of management's already rosy guidance. So far, so good -- but that's where the gravy train stops.

The revenue outlooks for the coming quarter and fiscal 2011 fell far short of estimates. To explain the disappointing guidance, management pointed to bad weather slowing down solar-panel installations in Europe, excess inverter inventory in Power-One's distributor channels, and lower energy tariffs in multiple markets. Ouch.

Analysts have turned from a Greek "buy" chorus to calling the stock "dead money." The market is taking Power-One's weakness as mildly negative news for the solar industry, sending rivals First Solar (NYSE: FSLR), JinkoSolar Holding (NYSE: JKS), and Suntech Power Holdings (NYSE: STP) down by a couple of percent on a generally upbeat market day. But nobody is suffering like Power-One itself.

"Classic Messed-Up Expectation opportunity" in Power-One, and that was when the stock was riding high on that terrific third-quarter report. Do you see an outsized value in the company's healthy cash flows or an overvalued growth stock screaming "dead money? 

[setravis]

Price...
Seems overdone!

Day's Range: 8.97 - 9.35
52wk Range: 3.41 - 13.04
Volume: 35,551,813
Avg Vol (3m): 5,631,780
Market Cap: 987.78M
P/E (ttm): 12.86
EPS (ttm): 0.72
Div & Yield: N/A (N/A)


Technicals
Most Actives
Gap Down
Percentage Loser 
RS Rating: 21 

[setravis]

PWER  Power-One Announces Record Fourth Quarter and Fiscal...  by GlobeNewswire  Feb 3 2011 4:05PM 

Feb 3, 2011 (GlobeNewswire via COMTEX) --

  --  Revenue exceeds $1 billion in 2010
  --  Quarterly revenue grows 157% year-over-year to $366 million
  --  Operating income reaches $265 million in 2010
  --  2010 diluted EPS of $0.96 includes $0.14 charge from SynQor litigation

CAMARILLO, Calif., Feb. 3, 2011 (GLOBE NEWSWIRE) -- Power-One, Inc. (PWER), a leading provider of renewable energy and energy-efficient power conversion and power management solutions, today announced financial results for the fourth quarter and fiscal year 2010. For the quarter ended January 2, 2011, Power-One posted net sales of $366 million, an increase of 157% from the fourth quarter 2009. Net income attributable to common stockholders for the fourth quarter was $54 million, or $0.35 per diluted share, compared to $5 million, or $0.05 per share for the same period last year. Net income was negatively impacted by a $22 million charge as a result of the SynQor litigation, which lowered diluted EPS by $0.14.

For the full year, Power-One achieved net sales of $1.05 billion, an increase of 143% compared to 2009. Net income attributable to common stockholders was $144 million, or $0.96 per diluted share, compared to a loss of $65 million, or a $0.74 loss per share for the prior year.

"We gained market share and achieved record sales and net income in 2010, as both Renewable Energy Solutions and Power Solutions posted positive operating income in the fourth quarter," said Richard Thompson, Chief Executive Officer of Power-One. "With our focus on technology-leading products and customer service, Power-One is positioned for continued revenue and profitability growth in 2011."

Renewable Energy Solutions

Renewable Energy Solutions posted a revenue increase of 285% versus last year as it continued to grow at a faster pace than the photovoltaic (PV) inverter market. In the quarter, Power-One introduced its U.S. inverter product line and opened its manufacturing and research and design center in Phoenix, Arizona.

Inverter and related product sales reached a record $263 million in revenue for the fourth quarter 2010. Renewable Energy Solutions contributed nearly 72% of the company's revenue, versus 48% in the fourth quarter of 2009. In the quarter, Power-One shipped 932 MW of inverters, bringing its 2010 total to 2.6 GW.

Power Solutions

Power Solutions increased sales by 39% year-over-year, with revenue of $103 million in the fourth quarter 2010 versus $74 million in the same period of 2009. During the fourth quarter, Power Solutions introduced products that exceed Climate Savers Computing Initiative platinum targets, providing its customers with greater efficiency and higher power density. At the same time, Power-One recorded a number of design wins with its platinum-level products.

Business Outlook

For the first quarter of 2011, Power-One forecasts revenue of $260 million to $290 million, indicating 80% growth at the midpoint of the forecast versus the prior year period. First quarter revenue is expected to be impacted by seasonality, heightened by inclement weather in Europe and a reduction in feed-in-tariffs across multiple markets, as well as excess inverter inventory in the channel. Based on current market demand and expectations of further feed-in-tariff reductions, coupled with expected contributions from the US and China, primarily in the second half of the year, Power-One anticipates generating revenue between $1.1 billion and $1.3 billion for the full year 2011.

Earnings Conference Call

Power-One will discuss its 2010 fourth quarter results today beginning at 2:00 p.m. Pacific Time. The call will be available both via the telephone at (877) 390-5535 or (631) 291-4579, conference ID #35367972, or over the Internet through the Power-One's investor relations Web site at http://investor.power-one.com . To listen to the call, please log-in at least 10 minutes early to register, download, and install any necessary audio software. For those who cannot listen to the live broadcast, the webcast will be available on the investor relations section of the Power-One's web site at http://investor.power-one.com throughout the current quarter.

About Power-One

Power-One designs and manufactures energy-efficient power conversion and power management solutions for alternative/renewable energy, routers, data storage and servers, wireless communications, optical networking, semiconductor test equipment, industrial markets and custom applications. Power-One, with headquarters in Camarillo, California, has global sales offices, manufacturing, and R&D operations in Asia, Europe, and the Americas. Power-One is a public company listed on NASDAQ under the ticker symbol PWER. For more information about the Company, please visit www.Power-One.com .

The Power-One, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=7338

Safe Harbor Statement

Statements made in this press release which state the Company's or management's intentions, beliefs, expectations or predictions for the future are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and may include statements regarding anticipated future productivity. It is important to note that future performance and actual results could differ materially from those discussed in or underlying such forward-looking statements as a result of risks and uncertainties that cannot be predicted or quantified and that are beyond the Company's control. Important factors that could cause actual results to differ materially include, but are not limited to: economic conditions in general and business conditions in the power supplies and renewable energy markets; foreign exchange rates; the Company's ability to improve its operational and supply chain efficiencies; competitive factors such as pricing and technology; the timing and results achieved in completing product manufacturing transitions to Company facilities in China or other low-cost locations; the threat of a prolonged economic slowdown or a lengthy or severe recession; continued volatility of the financial markets, including fluctuations in interest rates and trading prices of the Company's equity securities; the results of pending legal proceedings; the Company's ability to secure market share in higher margin, high-growth markets; the market growth of product sectors targeted by the Company as sectors of focus; and the Company's ability to increase working capital. Additional information concerning factors that could cause actual results to differ materially from expectations expressed in this press release are described in the Company's reports filed with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934 from time to time, which are also available through the Company's Website at www.power-one.com or through the SEC's Electronic Data Gathering and Analysis Retrieval System (EDGAR) at www.sec.gov . Power-One undertakes no obligation to publicly update or revise any forward-looking statement.

This news release was distributed by GlobeNewswire, www.globenewswire.com

SOURCE: Power-One, Inc.


CONTACT: Investor Contact:
Power-One, Inc.
Kevin Trosian
Vice President, Finance & Investor Relations
(805) 987-8741
Media Contact:
Edelman for Power-One
Jon Murchinson
[email protected]
Phone: 415-486-3274

[setravis]

Potential Long to Watch This Week...

From the looks of the chart
may have placed a Double Bottom (reversal) pattern in...


Day's Range: 8.32 - 8.62
52wk Range: 6.32 - 13.04
Volume: 3,115,466
Avg Vol (3m): 3,952,300
Market Cap: 881.89M
P/E (ttm): 7.65
EPS (ttm): 1.11
Div & Yield: N/A (N/A)

Technicals
Close Above the 50-day EMA

Last Price Quote is:
1.91%above 13-day EMA
1.29%above 50-day EMA
RS Rating: 73 

Resistance: $8.59...$8.93...$9.29
Support: $8.30...$7.96...$7.71

Recent CandleStick Analysis
Bullish
Date               Candle
Jun-02-2011   Bullish Harami