STR to Lose Biggest Customer - Analyst Blog
23 Januar 2013 - 6:40PM
Zacks
STR Holdings, Inc. (STRI), a worldwide leader
in Solar Panel Encapsulation, believes that its largest customer
First Solar, Inc. (FSLR) will terminate its
relationship with it. The company expects First Solar to begin the
termination process in the first quarter of 2013 and end the
long-lived relationship over the next few months.
The exact timing remains uncertain. Meanwhile, STR Holdings has
hired UBS AG (UBS) to review its strategic
options.
Transactions with First Solar had enabled STR Holdings to generate
revenues of $39.0 million during 2012. The loss of a long-standing
customer would have a material negative affect on the company’s top
and bottom line.
Though the adverse affect of losing First Solar cannot be avoided,
the company is trying to compensate this loss in several ways. STR
Holdings plans to stop its manufacturing operations at its East
Windsor, Connecticut facility by the end of the first quarter of
2013. It is planning a strategy that will provide services to its
customers in North America from its production facilities in Spain
and Malaysia.
In the process of comprehensive review of its cost structure, the
company intends to make significant headcount reductions throughout
the organization. Also, the company is evaluating its long-lived
assets for impairment, and thereby expects to incur significant
restructuring charges in 2013.
Meanwhile, addition of three new customers in China would also
compensate the loss incurred due to the annihilation of bond with
First Solar to some extent.
STR Holdings is a global provider of high quality solar
encapsulants to the photovoltaic module industry. The initiatives
taken by the company would help it in minimizing the costs and
maintain strong balance sheet. Of late, the company has been
focusing on product innovation, making strategies for growth in
Asia, taking cost reduction initiatives while maintaining its
balance sheet. Going forward, this would prove to be beneficial for
the company.
On the flip side, these positives would be offset by huge
expenditure on research and development, severance charges incurred
on closure of the facility and lowering average selling prices.
Like one other solar company, LDK Solar Co., Ltd.
(LDK), STR Holdings also presently retains a short-term Zacks Rank
#3 (Hold).
FIRST SOLAR INC (FSLR): Free Stock Analysis Report
LDK SOLAR CO (LDK): Free Stock Analysis Report
STR HOLDINGS (STRI): Free Stock Analysis Report
UBS AG (UBS): Free Stock Analysis Report
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