LDK Solar Company Earnings Worse Than Even Very Low Expectations

Solar Farm Desert
Solar Farm Desert

LDK Solar Co. Ltd. (NYSE: LDK) reported first-quarter 2013 results before markets opened this morning. The solar PV maker reported a diluted earnings per American depositary share (ADS) loss of $1.21 on revenues of $104.3 million. In the same period a year ago, LDK reported a loss per ADS of $3.91 on revenue of $135.9 million. First-quarter results also compare to the Thomson Reuters consensus estimates for a loss per ADS of $0.96 and $97.2 million in revenue.

For the second quarter, LDK estimates revenue will total $100 million to $150 million, while wafer shipments will total 250 to 300 megawatts and cells and modules will total 30 to 40 megawatts. The consensus second-quarter estimates expect a loss per ADS of $0.85 on revenues of $138.3 million.

LDK is one of the weakest of the dwindling number of Chinese solar module makers. The company survives thanks to the goodwill of its creditors, who appear to have the patience of Job with the struggling company.

A planned spin-off of LDK's polysilicon unit last week was cancelled, which means that LDK is on the hook for loan repayment of around $295 million. The company has only $174 million in cash and cash equivalents at the end of the first quarter, so the firm will have to get out its begging bowl again.

The company's CEO said:

We are undertaking a number of initiatives focused on the restructuring of our business. We are working closely with our stakeholders and relevant governmental agencies to negotiate solutions.

LDK's only hope for survival is intervention by the central or local government, disguised as a renegotiation of the billions in loans that the company has with China's state-controlled banks. Any investment in LDK now indicates that the investor is betting that the government will not let the company fail. Be advised.

LDK's shares traded higher after-hours last night, up 2.4% to $1.68 from the official close of $1.64. The stock's 52-week range is $0.71 to $2.36. Thomson Reuters had a consensus analyst price target of around $1.10 before today's results were announced. That "consensus" is based on one broker's estimate.

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