A next generation technology is slated for introduction in mid-2013. That will be a modular add-on unit with a selling price far below that of a complete system. The new "mono-silicon" approach promises a significant improvement in solar cell performance at a comparable cost to "poly-silicon." The Far East solar industry is in the midst of a consolidation, however, so few orders are expected right away. Financing remains hard to obtain and profit margins still are under pressure. Chinese government subsidies may cause the oversupply situation to persist by propping up weak participants as a vehicle to preserve jobs. Orders for GT Advanced systems probably won't accelerate until the profit potential from its new machines improves.
The LED segment is under pressure, too. GT Advanced encounters direct competition in that market. LED lighting costs far more than conventional bulbs. Consumer and commercial demand is rising, though. The current lull in capital equipment orders is likely to end long before the solar industry rebounds.
Our estimates are below the company's official guidance. GT Advanced predicts income of $.25-$.40 a share in 2013 on revenues of $500-$600 million. Results could bounce back starting in 2014. The company remains the only large volume producer of solar manufacturing systems. Future results might be diluted 20% by a recent convertible bond issue ($7.71 a share).
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