Stocks To Watch: MEMC Electronic Materials, Inc. NYSE:WFR


MEMC Electronic Materials, Inc. (NYSE: WFR)

MEMC is a worldwide leader in the sale and manufacture of solar wafers and related products to the semiconductor and solar industries. The company’s products are the building blocks for the $1 trillion electronics and the $35 billion solar cell and module markets. MEMC, through its SunEdison subsidiary, is also a developer of solar power projects and is a leading solar energy services provider. Founded in 1959 and based in St. Peters, Missouri, MEMC employs approximately 7,500 people worldwide and recorded sales of $2.2 billion in 2010.

MEMC’s stock is traded under the symbol WFR on the New York Stock Exchange and is included in the S&P 500 Index.

MEMC announced on Dec. 8, 2011 a series of actions to be taken during the fourth quarter of 2011 and the first quarter of 2012 that will reduce the company’s global workforce, right size its production capacity and accelerate operating cost reductions in 2012 and beyond. In an effort to better align the business to current and expected market conditions in the semiconductor and solar markets, MEMC expects the actions to improve the company’s overall cost competitiveness and increase cash flow generation across all segments.

The following is a summary of actions to be taken by MEMC. These actions are expected to reduce operating expenses by over 15% versus the company’s current run rate.

  • As part of this restructuring, MEMC will reduce its total workforce by over 1,300 persons worldwide, approximately 20% of the company’s employees. Of the reductions, approximately 250 positions are in the United States, and an estimated 41% are in the Semiconductor Materials segment and 47% are in the Solar Materials segment;
  • Having substantially completed a multi-year realignment of our global semiconductor crystal and wafer manufacturing footprint, the company is undertaking more aggressive productivity initiatives to implement best practices across sites;
  • The company intends to idle its Merano, Italy polysilicon facility, up to 6,000 metric tons of annual capacity, and may close it unless dramatic feedstock, power, and other cost reductions are achieved in the near term. The company is working with the province and key suppliers to determine the feasibility of such reductions;
  • To improve costs and alignment with current market conditions, the company will reduce production capacity at its Portland, Oregon crystal facility to allow us to optimize the technology utilized at this facility, and will limit the ramp of the Kuching, Malaysia wafering facility to 300MW; and
  • To focus on providing our downstream solar customers the highest quality and lowest cost systems and achieve improved operating efficiencies, the Solar Materials and SunEdison business units will be consolidated into a single Solar Energy business unit, effective January 1, 2012.

Company Snapshot:

Trading Symbol: NYSE: WFR
Last Price: $4.10
Avg Vol (3 month): 7,762,440
Avg Vol (10 day): 3,621,940
Market Cap: 944.91M
Forward P/E  (fye:12/31/2012): 8.54
Shares Outstanding: 230.46M shares
Top Institutional Holder: 22,658,485 shares
Thornburg Investment Management, Inc.
(as of 9/30/2011)
Top Mutual Fund Holder: 10,926,751 shares
Thornburg Value Fund
(as of 9/30/2011)
Contact Information: 501 Pearl Drive
(City of O’Fallon)
P.O. Box 8
St. Peters, MO 63376-0008
Investor/Analyst inquiries: Chris Chaney
Director, Investor Relations
Phone: (636) 474-5226Mark Murphy
Senior VP and CFO
Phone: (636) 474-5338Steve O’Rourke
Chief Strategy Officer
Phone: (636) 474-5243
Analyst Recommendations:  (current month)
Strong Buy 2
Buy 7
Hold 12
Underperform 2
Sell 2


2011 Fourth Quarter Outlook

MEMC is revising its fourth quarter 2011 guidance as a result of underlying semiconductor and solar market conditions. Current expectations for the range for fourth quarter 2011 non-GAAP EPS is ($0.05) to $0.10 and for non-GAAP revenue is $789 million to $861 million. These non-GAAP future performance measures exclude all fourth quarter restructuring and impairment charges.

The company expects fourth quarter 2011 GAAP EPS in the range of ($5.20) to ($6.38) and GAAP revenues in the range of $523 million to $585 million. Capital market and liquidity risks in Europe may impact the timing of planned fourth quarter 2011 SunEdison project sales and pricing, which would result in a shift of these project sales into 2012 and some reduction in both GAAP and non-GAAP fourth quarter revenues and EPS discussed above.

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