Thursday, September 16, 2010

Barron's: Power-One (PWER) Tumbles on Margin Warning from Rival SMA Solar

Each time I take even a minor step back into the solar space I am reminded why it's so traumatic.  The reliance on government policy is so dominant and can smack your stock from out of the blue.  It appears yesterday's selloff in Power-One (PWER) was due to a competitor's warning.  (thanks to a reader for sending me a notice on this) Per Barron's

  • Shares of Power-One (PWER), which makes solar inverters, have been hard today after rival SMA Solar warned that it expects a sharp drop in margins in 2011 as some countries reduce solar subsidies. Germany-based SMA Solar is the world’s largest provider of solar inverters, which are used to convert the DC power generated by solar cells to AC current.
  • SMA said it expects its EBIT margin for next year of 21%-25%, down from an estimated 26.5%-28.5% in 2010. The company also warned that falling subsidies for solar power could cause the market to shrink next year. As Reuters notes, SMA said that while 2011 could see industry growth of up to 20%, the company added that it could not rule out a slump of 10% if the subsidy cuts hit the market harder than expected.

At this point the chart has taken a traumatic turn for the worse.  A close below $9.50 will have me exiting but I already have one foot out the door as a rebound off a big red candle like that is rare indeed.

Long Power-One in fund; no personal position


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