MEMC Electronic Materials (WFR) Beats, But Lowers Guidance

MEMC Electronic Materials (WFR) beat estimates after the bell today and shares initially surged about 5% on the news, but have since given back much of the gain likely due to soft guidance.  The company reported a non GAAP EPS of .29/share on revenues of $779 million vs the analyst estimate for .08/share on revenue of $700 million. 

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CEO Ahmad Chatila commented: "Our second quarter results demonstrate the resilience of our company following the Japan earthquake and in the midst of a severe solar materials downturn.  Our Semiconductor Materials business recovered quickly from the March earthquake in Japan, and 300mm wafer output is now at pre-earthquake levels despite softening demand in underlying semiconductor markets.  Responding quickly to market conditions in solar wafers, our Solar Materials business took actions to restructure customer and supplier agreements and right-size the business.  We are pleased to have reached the resolution with Suntech, and we expect that our future relationship with Suntech will be much improved, and that they will continue to buy from us in 2011 and beyond.  SunEdison, with a growing pipeline and interconnection ramp, continues to de-risk our Solar Materials business by providing more predictable demand and clear visibility into end markets.  We remain focused on our strategic business objectives, investing for long-term growth and driving productivity in our semiconductor and solar businesses."

It was a good resilient quarter out of WFR, but the company is lowering guidance for the full year and now expects revenues in the range of $3.3 – $3.6 billion and non GAAP earnings of .80 – 1.00.  That’s still about inline with the analyst estimate on the revenue side (3.45 billion), but a bit light on EPS which analysts expect to come in at $1.01.

Shares of WFR have been on a long slide and are down about 50% in just a few months, sitting at multi year lows.  Shares recently hit a nine year low!  I still believe that WFR is going to provide an outstanding entry point, but it’s still just a bit too soon.  It will be interesting to see how traders react to the mixed report tomorrow.  One thing is for sure.. this is a stock in need of a big, high volume up day.

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