June 1, 2010 / 9:02 PM / 8 years ago

UPDATE 2-Canadian Solar gets SEC subpoena, delays results

* SEC seeks documents relating to certain sales in 2009

* Shares fall over 16 percent in after hours trading

* Company may revise 4th quarter, full year 2009 revenue

(Recasts, adds details on Q1 preliminary results, revision of prior results, analyst comment and byline)

By Poornima Gupta

SAN FRANCISCO, June 1 (Reuters) - Chinese solar-cell maker Canadian Solar Inc CSIQ.O said on Tuesday it received a subpoena from U.S. securities regulators seeking documents relating to certain sales in 2009, sending its shares down over 16 percent.

Canadian Solar shares fell 16 percent in after hours trading, once the stock started trading after being initially halted. The shares closed down 8.42 percent at $11.86 in regular trading on the Nasdaq exchange.

Canadian Solar said in a statement it will cooperate with the Securities and Exchange Commission inquiry.

The company, which was founded in Ontario, Canada, but has manufacturing operations in China, also said it has delayed the full release of its first quarter results because the audit committee of Canadian Solar’s board has launched an investigation.

The audit committee has retained outside counsel and independent forensic accountants to help review the transactions described in the subpoena, the company said, but did not provide further details on the SEC inquiry.

Burt Chao, an analyst with Simmons & Co said the lack of information on the investigation could have a big impact on the shares.

“It’s bad for any company to have this happen. I think it’s worse for the Chinese companies because they already have this assumed lack of transparency in the market,” he said.

“They’re not very specific as to what the allegations are in the subpoena ... that could be to the benefit or the detriment of the company. People are going to just let their imaginations somewhat run wild.”

MAY REVISE PRIOR RESULTS

Canadian Solar also said it may revise its fourth quarter and full year 2009 results as the company now intends to recognize sales only after receiving full cash payments from certain customers. This is also being done to account for subsequent return of goods after the end of the quarter, it said.

These sales figures are being deferred to the first and second quarters of 2010 and the full year 2009 net revenues may be revised accordingly, the company said.

Canadian Solar was previously set to release its first quarter results on Wednesday followed by a conference call to discuss the results. Both have been postponed indefinitely.

In a preliminary release of its results, it said it shipped an estimated 186.4 megawatts of solar modules during the first quarter.

Europe remained the company’s largest market with shipments to the region growing partially due to increased demand ahead of Germany’s proposed reduction in solar subsidies.

Shawn Qu, Chairman and Chief Executive of Canadian Solar said the unexpected depreciation of the Euro put pressure on margins and the company is aiming to increase sales in non-Euro currencies.

“We expect to realize a higher percentage of our sales in non-Euro currencies starting this June,” he said, adding the company has also started to conduct U.S. dollar-denominated sales with certain European customers.

Looking forward, the company expected shipments in the second quarter to be in the range of 170 megawatts to 180 megawatts, with expected gross margins of 13 percent to 14 percent.

Shipments of solar modules during the second half of the year is estimated to exceed the first half, the company said.

For the full year 2010, the company increased its shipments outlook by 100 megawatts to 700 megawatts to 800 megawatts.

Additional reporting by Dana Ford in Los Angeles; editing by Andre Grenon

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