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First Solar Posts Biggest-Ever Loss as Revenue Slides 49% (1)

(Bloomberg) -- First Solar Inc. reported its biggest-ever loss after overhauling its manufacturing strategy and firing more than a quarter of its workforce.

The largest U.S. solar manufacturer’s fourth-quarter net loss was $719.9 million, or $6.92 a share, compared with net income of $164.1 million, or $1.60 a share, a year earlier, Tempe, Arizona-based First Solar said in a statement Tuesday. Excluding restructuring charges and other items, the company posted a profit of $1.24 a share, beating the 98-cent average of 18 analysts’ estimates compiled by Bloomberg.

The big loss was due mainly to a restructuring program announced in November, as a global oversupply helped drag panel prices down 35 percent last year. First Solar abandoned plans to introduce a new panel design this year, the Series 5, while firing 1,600 workers and retooling its factories to produce the Series 6 starting in mid-2018.

That means the company is relying on its aging Series 4 design, which is less competitive compared to rivals’ products. Sales plunged in the quarter to $480.3 million from $942.3 million a year earlier.

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Chief Executive Officer Mark Widmar is calling 2017 a transition year, and he revised his earnings forecast for this year to a loss of 5 cents to 80 cents a share, from the prior forecast ranging from a loss of 10 cents a share to profit of 45 cents. Sales this year will be $2.8 billion to $2.9 billion, up from the prior guidance of $2.5 billion to $2.6 billion. He was promoted in July from chief financial officer and immediately began reviewing First Solar’s strategy.

During the fourth quarter, First Solar recorded pre-tax charges of $729 million, mainly due to the restructuring plan, on top of $4 million it took in the third quarter.

The last time First Solar reported a loss of this magnitude was the first quarter of 2012, when solar suppliers were suffering through a global glut that dragged down prices and ate into margins. The company lost $5.20 a share then, in part because of another restructuring program.

(Updates with revenue guidance in fifth paragraph.)

To contact the reporter on this story: Christopher Martin in New York at cmartin11@bloomberg.net.

To contact the editors responsible for this story: Reed Landberg at landberg@bloomberg.net, Will Wade, Carlos Caminada

©2017 Bloomberg L.P.