MEMC Electronics (WFR) Lowers Guidance, Announces Plant Closures
MEMC Electronics (WFR) is trading down about 5% with heavy volume after it lowered guidance due to a recent failureat its Pasadena, Texas plant. The company has disclosed that on Aug7th, a portion of the plant had to be shut down due to a majorequipment failure and that rebuilding has been more difficult thanexpected. While the company expects to be back to normal operations bythe end of September, lost production and associated costs are expectedto eat into revenues and margins for the 3rd quarter.
They now anticipate Q3 2009 revenues to be in the range of $285– $315 and gross margins in the single digits. Previous guidancecalled for revenue in the $300 – $350 range and gross margin at 12%.
The company has also announced the planned closing of itsSherman, Texas and St Peters, Missouri plants in order to streamlineand cut costs. Both are expected to be phased out within the next yearor so.
WFR CEO Ahmad Chatila said, “We must continue to aggressivelydrive all unnecessary costs out of the business during theseextraordinary times. We will be shifting this high-volume productioncloser to a number of our customers, who are located in lower costregions. This will allow us to reduce manufacturing costs and to serveour customers effectively, with the right cost-competitive capacity –in the right places – to meet their needs.”
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