Justice Sirikah

Q-Cells (PinkSheets: QCLSY) In the Red amid A Bitter Wrangle with Wafer Supplier, LDK Solar (NYSE: LDK)

by Justice Sirikah November 12, 2009
qclsy_logo.jpgQ-Cells (PinkSheets: QCLSY) announced on Thursday that it has reached a decision to trim back its production lines including laying off 20 percent of its manpower as it battles to tint traces of red ink from its recent third quarter results. The third loss in a row, setting its total deficit at $1.4 billion so far this year, has come at a time when the Germany solar cell manufacturer is engaged in a bitter row with a Chinese wafer manufacturer, LDK Solar Company, Ltd. (NYSE: LDK), involving a 2007 supply contract.

  Pinning the blame on reorganization expenses, unyielding competition from Asian counterparts and far-reaching price slump in the global solar cells market, Q-Cells said it made a net loss of $382.6 million on consolidated revenues of $273.8 for the third quarter. While sales sank from $522.4 million of the matching period in 2008, the company swayed from net earnings of $110 million in the same period a year ago. Analysts had calculated a lower loss of $217 million and revenues of $284 million.

  During the period spanning from July to September Q-Cells burned up $243.6 million in a restructuring programme dubbed ‘Q-Cells reloaded’, introduced in August. The programme comprises a number of approaches designed to eventually see a reduction of costs as well as enhanced performance at the company. Despite the evidence of amplified expenses on a short term level, the company reckons that its reorganization measures will start to take effect next year, setting it on a recovery path.

  In other news, Q-Cells is reportedly alleging that LDK Solar has failed to meet the obligations of a supply contract the two signed in 2007, and is therefore expecting to withdraw a $244.5 million prepayment it had made. However, LDK has since sought legal jurisdiction to freeze the funds that are deposited in a German bank, claiming that it had put the deliveries on hold acting on the request of Q-Cells as it wanted to renegotiate the transaction, having taken note of the fact that wafer prices had been higher at the time of the requisition.


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