Options Wonderland

[langlui]

STP +10% so far in pre-market.

Suntech 3Q Profit Up on Rising Demand
Thursday November 15, 8:04 am ET
Suntech 3rd-Quarter Profit Climbs 43.8 Percent As Production Ramps to Meet Strong Demand


SAN FRANCISCO (AP) -- Suntech Power Holdings Co. said Thursday its third-quarter profit rose sharply as the solar-products maker increased production to meet "robust demand."
Net income rose 43.8 percent to $41.3 million, or 25 cents per share, from $28.7 million, or 19 cents per share, a year earlier. Revenue rose 94.7 percent to $317.4 million from $163 million.

Results missed Wall Street estimates. Analysts polled by Thomson Financial expected earnings of 28 cents per share on revenue of $355 million, on average.

"Our recent long term silicon contracts with Asia Silicon, Nitol Solar, ReneSola and a major Korean conglomerate mark a major turning point for Suntech's silicon supply environment as they will both enhance our margins and expand our volume," Chief Executive Zhengrong Shi said in a statement.

During the third quarter, Suntech produced solar cells and modules with over 100 megawatts of annual generating capacity. A one-megawatt power plant running continuously at full capacity can power 778 households each year, according to the Department of Energy. Solar technologies have lower capacity factors since their availability to generate power is constrained by availability of the sun.

Suntech's recently reported long-term supply contracts for silicon, the expensive feedstock for solar products, will allow the company to expand production further without subjecting Suntech to spot prices, Shi said. Investors have urged solar companies to control costs to make solar products less expensive and more competitive with traditional grid power.

"These new contracts not only allow us to accelerate our growth, they also significantly decrease our long term cost of silicon and bring Suntech closer to the goal of grid parity," She said.

Suntech shares rose $2.81 or 4.6 percent, to $64.50 in premarket trading after closing at $61.69 on Wednesday.