North Coast Solar Stocks

November 17, 2009

SunPower shares tumble as company investigates possible accounting errors

Filed under: SPWR — Tags: , , , — Jason @ 9:23 am

9:23 am EST, Tuesday November 17, 2009

NEW YORK (AP) — Shares of SunPower Corp. (SPWRA, SPWRB) tumbled in premarket trading Tuesday, following news that it is investigating whether its manufacturing operations in the Philippines made unsubstantiated accounting entries during the first three quarters of 2009.

The maker of solar power products said some of the entries relate to its fiscal year ended Dec. 28, 2008.

Shares fell $3.82, or 14 percent, to $22.90 ahead of Tuesday’s market open. The stock has ranged from $18.50 to $46.30 over the past year.

On Monday after the markets closed, the company said that based on preliminary findings, its audit committee has identified accounting entries that may have overstated expenses by about $1 million on the cost of goods sold in the first quarter of 2009. The entries also may have understated expenses by about $14 million in the second quarter and about $2 million in the third quarter of 2009.

SunPower estimated identified accounting entries totaling about $9 million in understatements should have been recorded in 2008. The company is working with its audit committee to determine if any restatements to its 2009 quarterly reports and 2008 annual results will be necessary.

The company noted that until its probe is complete, there can’t be any assurance that broader issues don’t exist.

“While accounting errors in any company’s financial statements are as welcome as the bubonic plague, SunPower’s early quantification of the adjustments indicates it may be manageable,” said Deutsche Bank analyst Steve O’Rourke, who maintained his “Buy” rating and $31 share price target.

O’Rourke also held to his outlook for the company, as he waits for a full-scope disclosure of the issues. He said the accounting errors call the company’s credibility more into question than its business model.

Collins Stewart analyst Dan Ries maintained a “Hold” rating for the company. He noted that SunPower’s cost of goods sold has been a key concern driving his rating for the solar company.

“If costs were being understated since calendar year 2008, our concerns would only grow,” Ries said in a report to clients.

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