MEMC shares down on gloomy outlook, analyst reactions

Shares of wafer maker MEMC Electronic Materials Inc. slid today after the company issued an earnings outlook Thursday that fell below analysts’ expectations.

In afternoon trading, MEMC shares fell $2.96, or 16 percent, to $15.98, from Thursday’s close of $18.94. Today was the first day of trading since MEMC said it would report first-quarter revenue of about $214 million. U.S. financial markets were closed on Good Friday.

The O’Fallon, Mo.-based company makes polysilicon, a raw material used in wafers for electronics and solar applications. The company also makes wafers for semiconductor, or electronics, uses and sells solar wafers.

MEMC’s estimate on Thursday was consistent with its January outlook, when it said first-quarter revenue could drop as much as 50 percent from the fourth quarter of 2008. MEMC posted net sales of $425.7 million last quarter.

But the outlook was worse than what analysts anticipate. Analysts, on average, expect revenue of $220 million for the quarter, according to Bloomberg data.

Several analysts issued reports today. Collins Stewart analyst Dan Ries lowered his forecast to a loss of 6 cents per share on $214 million in sales. He mentioned that demand for semiconductor wafers was weak in the first quarter, and solar wafer customers likely limited their first-quarter shipments.

“While (the first quarter) will likely be the low point, the recovery is expected to be most over the course” of the calendar year, wrote Ries, who maintained a “hold” rating on MEMC.

MEMC also said Thursday that its gross margin for the quarter is now expected to be about 9 percent of sales, compared to its January outlook of a 20 percent gross margin.