SunPower reported second-quarter losses to investors this week.

The disappointing performance came as a result of deep weaknesses in the European market and some cumbersome expenses resulting from severed contracts with third-party solar cell providers.

“These results are unacceptable,” said SunPower CEO Tom Werner in a conference call.

Despite a second quarter loss of $147.9 million, Werner said he remained “optimistic” about the remainder of 2011 and 2012.

“We have significantly restructured our European focus,” he said.

Where SunPower had concentrated on utility-scale projects with big incentives from the Italian and German governments, new obstacles in those markets pushed the company to devote its efforts to private residential and commercial solar installations. While the profit margin is narrower in that market, demand is higher.

He also said that the company is aggressively pursuing cost-cutting measures and is already reducing steps in the manufacturing process. Werner told investors that he believes SunPower will achieve panel prices under $1 a watt by the end of 2012 with its step-reduction. That’s six months earlier than he initially believed the company would be able to offer such competitive pricing.

“Pricing is kind of on the aggressive side,” Werner said of the market in general. “We think we’re in a unique position to get there first because we already have a highly efficient system.”

French oil giant Total purchased a 60 percent stake in SunPower earlier this year. Werner said that the high-profile company’s involvement with SunPower will give it increased visibility in the European market.

It has also opened up a line of credit for SunPower that it could not have previously accessed. The company was able to borrow $225 million, which it will use to fund utility-scale projects.

“There are some of the short term benefits of our new relationship with Total,” Werner said.

While European markets slowed in the second quarter of this year, demand picked up in North America. Werner said SunPower has nearly 4 gigawatts of solar projects in the pipeline in North America, and he expects that market to grow dramatically to lead the world in solar activity by 2015.

To supply the demand, the company is opening a new fabrication plant in Mexicali, Mexico.

Image courtesy of SunPower.