The kitchen-sink theory dictates that a company's chief financial officer should find every bad charge he can think of and record it in a quarter that is going to be terrible anyway so future quarterly earnings aren't marred. That is more or less what Yingli did: It announced impairment charges of $361 million related to its polysilicon company, Fine Silicon, inventory charges of $43 million -- which hit gross margins -- and said it expects future charges of $135 million on its long-term polysilicon supply contracts as a result of continuing decline in the polysilicon purchase price.
"The impairment of long-lived assets of Fine Silicon was to reflect the less than expected profit-generating ability of Fine Silicon's assets due to a sharp decline in the spot market price of polysilicon," Yingli said in a release. Previous to this quarter, Yingli's attempts to ramp its polysilicon operations have been an earnings headwind, for at least two years now, in fact.
There's another frustrating element of the Fine Silicon story, now that the company is taking a $361 impairment charge related to it: It was controlled by the solar company's chairman and acquired at the expense of public shareholders. The deal has always stood as one of the most glaring examples of Chinese solar companies buying affiliates that are as good a deal for their chairman as for shareholders, which has been too common an occurrence in this sector.
Trading in these beaten up stocks is volatile day to day and the rallies on shipment guidance seems,
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