SunPower stock slides in spite of Obama effect

Shares in US solar specialist SunPower fell this week after the company announced that the growing strength of the dollar against the euro would affect its business.

SunPower claims its earnings for the current quarter and for the whole of fiscal year 2009 could be affected by the change in exchange rates between the US dollar and other currencies.

"As a result of the US dollar's recent substantial appreciation relative to the euro, the company became under-hedged during the fourth quarter of 2008 and for the fiscal year 2009," the company said in a statement.

SunPower is one of the first US solar companies to announce the impact of the exchange rate changes but analysts believe others could follow suit.

European countries such as Germany and Spain represent some of the biggest markets for solar panels so the growing strength of the dollar compared with the euro will hit companies such as SunPower, which export large quantities of product to the region.

Consequently, shares in a number of leading US solar players fell yesterday, with SunPower shares down 18.8 per cent to $41 (£26), Suntech Power falling 9.8 per cent, and First Solar down 5.5 per cent.

According to SunPower, the financial impact of the exchange rate changes are expected to be about $17m on revenue and $15m on gross profit. For 2009, the company claims the impact will be approximately $50m in revenue. The company now expects fourth-quarter 2008 total revenue of between $338m and $418m.

However, the long-term outlook for the sector remains bullish in the wake of Barack Obama's election victory this week.

The president-elect has pledged to make renewables a central pillar of his energy policy, and is expected to introduce targets for suppliers to generate a quarter of their energy from renewable sources by 2025 alongside plans for $150bn of cleantech R &D investment over the next 10 years.

Last month, solar panel maker Suntech Power Holdings claimed the market for solar panels was still seeing demand outstrip supply despite the economic downturn.

"With the financial crisis, the high demand relative to supply has sort of shrunk a bit," the company's chief strategy officer, Steven Chan, told Reuters at the time. "But we still feel like we are in a situation where there is still more demand than supply of modules."

Yesterday's fall in share prices of solar stocks also follows a week-long rally that saw several solar firms' share prices climb up to 50 per cent.