LDK Solar Co Ltd suffered a quarterly loss as a sharp drop in solar wafer prices forced it to write down millions of dollars in inventories, but forecast revenue for the current quarter above estimates on stabilizing prices.
The China-based company's shares, having lost 42 percent of their value so far this year, rose as much as 6 percent to $6.18 in morning trade on the New York Stock Exchange.
The MAC Solar companies index rose 2.3 percent.
LDK said prices of its products were stabilizing and added gross margins should improve in the second half of the year.
We believe growth will resume in the second half of 2011, LDK Chief Executive Xiaofeng Peng said in a statement.
LDK, a major supplier of wafers and cells that are used to build photovoltaic panels, was hammered this year following cuts in generous solar subsidies in top markets Germany and Italy.
But the company, like Suntech Power and Trina Solar Ltd, is hoping increased sales in smaller solar markets such as the United States, China and India to push up revenue in the second half.
LDK -- whose customers include JA Solar, MEMC, Hyundai Heavy and Phoenix Solar -- forecast third-quarter revenue of $630-$680 million. Wafer shipments are expected to be 350-400 megawatts (MW), compared with 429.2 MW in the second quarter.
Third-quarter module shipments are expected to expand markedly to between 250 MW and 300 MW from 79.4 MW in the second quarter.
Gross margin, which had plunged to 2.2 percent in the second quarter with an average selling price for wafers of 66 cents per watt, is expected to be 11 to 16 percent in the third quarter.
LDK said it plans to spin off its polysilicon business to raise cash to help pay down some of its more than $2.2 billion in short-term debt.
On Monday, however, executives gave no clues as to the timing of the spin-off, saying on a conference call with analysts that the company was preparing for an initial public offering by making sure the business was profitable and making good progress.
The company reported a second-quarter loss of $87.7 million, or 62 cents per American Depositary Share (ADS), compared with a net profit last year of $45 million, or 36 cents per ADS.
Excluding one-time items, it had a second-quarter loss of 28 cents a share, while analysts on average had expected a loss of 25 cents a share, according to Thomson Reuters I/B/E/S.
Net sales fell 12 percent to $499.4 million, against market estimates of $506.5 million.
LDK shares shed some of their initial gains and were trading up 1.5 percent at $5.93 in late morning trade.