Why SunPower Stock Rose after the Restructuring Announcement



Series overview

On December 7, 2016, SunPower (SPWR) announced the details of its restructuring initiatives approved by the company’s board of directors. It updated its fiscal 2017 financial guidance. In this series, we’ll discuss the company’s latest restructuring initiatives and fiscal 2017 guidance in detail. Also, we’ll analyze the impact of these initiatives on SunPower’s operations.

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SunPower’s stock reaction

The market cheered SunPower’s restructuring initiatives. The initiatives are expected to reduce the company’s costs and improve its future margins. Moving ahead, SunPower intends to concentrate its Interdigitated Back Contact products to newer and lower-cost cell manufacturing facilities. SunPower plans to accelerate its panel and Balance of Systems cost reduction roadmaps.

SunPower stock outperformed its peers during the intraday trading session on December 7, 2016. The stock rose nearly 14%. SunPower’s peers such as First Solar (FSLR) and Canadian Solar (CSIQ) rose nearly 5% and 6%, respectively. Trina Solar (TSL) closed about 2% above its closing price the previous day. The Guggenheim Solar ETF (TAN), which tracks the broad-based solar market, rose nearly 2% during the same period.

Restructuring initiatives

SunPower decided to close its Philippine-based Fab 2 manufacturing facility to reduce costs and focus on improving its future cash flows. As a result, about 700 megawatts of the company’s old and higher cost technology at Fab 2 is expected to be phased out by the end of 2017. The company expects ~2,500 of its employees to be impacted, primarily in the Philippines. It represents ~25% of its global workforce.

In the next part of this series, we’ll discuss how SunPower’s restructuring initiatives will impact its operations. We’ll also discuss the company’s fiscal 2017 guidance.


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