High efficiency solar panel maker SunPower (NASDAQ:SPWR) beat sales estimates on strong performance in the residential and commercial components (R&C) division and gained from the deals signed in the U.S., India and other Asian countries.  SunPower, which competes with low cost Chinese manufacturers like Trina Solar (NYSE:TSL), saw its margins dwindle in Q4, with the R&C division margins dropping to 7.5% from near 24% a year ago period. Operating losses for the quarter narrowed to $56 million from a $363 million loss recorded in Q3. Despite the operational losses in the past four quarters, the company has maintained a strong cash position due to the backing from European oil major Total SA, which owns a 66% stake in the company.
We have a $13 price estimate for SunPower, which is at a 70% premium to the current market price. We will update our estimates based on the latest results shortly.
Residential Systems Push
SunPower managed to increase its market share by targeting the residential market in California over the past quarter. Many solar companies are competing for a foothold in the segment as governments are scaling back subsidies enjoyed by utility systems. The contribution of R&C systems to the company’s total revenues increased from 30% in Q4 2010 to 50% in Q4 2011.
SunPower is also offering a residential lease program wherein customers can make monthly payments for the electricity produced through their solar panels rather than having to buy costly components. 
The company is also expecting more growth in the systems business which boasts of a solid project line in North America. The company has started work on a 350 MW solar farm in California that enjoys a $1.24 billion Department of Energy loan guarantees.  It also won three contracts to supply around 711 MW to utility companies in California starting 2014.
SunPower is looking to push its products more aggressively in 2012, supported by a strong cash position thanks to the backing from Total.  CEO Tom Werner said that 2012 will be “a transitional year” for the industry. The company forecasts revenues between $2.60 and $3.0 billion for the coming year, and margins between 7% and 10% in Q1 2012, after reporting a small operating loss in this quarter. Notes: