NEW YORK (AP) — Shares of Amyris Inc. tumbled Friday, a day after the sustainable-energy company withdrew its production and cash flow targets and said it would look for additional financing to pay its bills.
THE SPARK: Amyris told analysts in a conference call Thursday that it was scaling back its plant expansions to just one instead of two. As a result, the company said it was withdrawing its 2012 production guidance of between 40 million liters and 50 million liters of Biofene.
In addition, the Emeryville, Calif.-based company said it no longer expects positive cash flow from operations this year and to cover the gap it will need extra equity financing. Amyris said it expects to close on the financing in the next few weeks.
THE BIG PICTURE: Amyris converts plant sugars into hydrocarbon molecules, which can be used in a range of products such as cosmetics, flavors, fragrances, lubricants and diesel and jet fuel.
John Melo, the company's president and chief executive, said in the Thursday conference call that the company wants to focus on quality, rather than producing "volume for the sake of volume."
"It is a focus on selling the highest value products and really being prudent with how we bring up production to focus on a stable production base as we build out our business," Melo told the analysts.
Melo said that new focus on quality over quantity hasn't changed the company's long-term plans and that its growth strategy remains on track.
THE ANALYSIS: The news prompted Raymond James analyst Pavel Molchanov to suspend his "Outperform" rating for Amyris until more details are released in the company's earnings conference call.
"We remain positive on Amyris' positioning in the (second generation) biofuels space, and we don't think that yesterday's news permanently condemns its technology platform," Molchanov wrote in a note to investors. "That said, it will clearly take time for the growth curve to materialize — and for the stock to get out of its penalty box."
Meanwhile, Deutsche Bank's Vishal Shah cut his rating for the stock to "Hold" from "Buy," saying that while he still likes the stock, he is "taking a wait-and-see approach to the company's ability to execute on yet to be defined milestones."
But Cowen analyst Robert Stone was more upbeat and backed his "Outperform" rating for the company, saying that the near-term problems don't change long-term opportunity for investors.
THE SHARES: In afternoon trading, Amyris shares dropped $2.80, or 29 percent, to $6.93, after falling as low as $6.85 earlier in the day, falling well below its previous 52-week low of $8.77.
Over the past year, Amyris' shares have lost about 78 percent of their value.
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