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Tesla Motors (TSLA) Posts Wider Than Expected 3Q Loss

 November 05, 2012 08:07 AM


(By Balaseshan) Electric vehicles manufacturer Tesla Motors Inc. (NASDAQ: TSLA) reported a wider quarterly loss due to lower development services revenue as well as higher costs and expenses. Despite revenue exceeding consensus, adjusted loss was wider than Street's expectations.

Loss for the third quarter widened to $110.80 million or $1.05 per share from $65.08 million or $0.63 per share last year. Adjusted loss per share widened to $0.92 from $0.55.

Revenue fell 13.1% to $50.10 million. Automotive sales increased to $50.02 million from $43.24 million, while development services revenue plunged to $81,000 from $14.43 million.

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Analysts, on average, polled by Thomson Reuters had expected a loss of $0.90 per share on revenue of $48.29 million for the third quarter.

Gross margin for Q3 was negative 17%, in line with previous guidance, primarily due to the cost of automotive sales that reflects the full burden of operating Tesla factory allocated over a limited number of vehicles produced, along with launch-related variable cost inefficiencies.

Capital expenditures were about $69 million in the latest quarter, as the company continued to build out the Tesla Factory and made final tooling payments to suppliers of Model S components.

Tesla maintained its 2012 revenue guidance of $400 million to $440 million, including its expectation of about 2,500 – 3,000 Model S deliveries to customers in Q4. Street analysts predict revenue of $408.49 million for fiscal 2012.

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Automotive sales gross margin is expected to improve significantly in Q4 due to higher volumes and planned cost reductions. Tesla is also reaffirming gross margin target of 25% in 2013 upon achieving the manufacturing efficiencies and planned cost reductions associated with its objective of 20,000 deliveries in 2013.

The company expects that R&D spending will be flat in Q4, as it continues with further vehicle development, including introduction of smaller battery packs, and homologation for EU and Asian markets.

Selling, general and administrative expenses should rise moderately on a quarterly basis as Tesla continues to increase its vehicle selling and servicing capabilities. The company remains on plan for about $240 million of capital expenditures for the year.

"One month from now, we expect Tesla to double production again and achieve the target rate of 400 cars per week or 20,000 per year. Despite many short term costs associated with the ramp, Tesla nonetheless expects to get approximately halfway to the 25% gross margin target by end of year," Chief Executive Elon Musk and Finance Chief Deepak Ahuja said in a statement.

TSLA closed Friday's regular session down 1.12% at $28.92. The stock has been trading between $22.64 and $39.95 for the past 52 weeks.

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