First Solar Comes Out With a Thud

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

Solar's devastating quarter has begun and First Solar (Nasdaq: FSLR  ) kicked it off with a thud. But really, what were we expecting? Demand in Europe came to a screeching halt in the second quarter, sales prices declined, and competition became fiercer than ever.

Net sales were $533 million in the second quarter and earnings per share were just $0.70 as pressure hit everyone in the industry. Management did predict that earnings per share for the year would be $9.00 to $9.50 as system sales and overall demand began to pick up. Here are some of the other highlights for the quarter:

  • Cost per watt is stuck at $0.75 overall, but in Malaysia core costs per watt are just $0.69.
  • Standard balance-of-system costs are down to $0.99 from $1.40 two years ago. As these costs fall, it will help drive First Solar toward grid parity.
  • Systems pipeline of 450 MW in 2011 with ability to increase to 500 MW.
  • India is expected to be greater than 200 MW in 2011. This is extremely fast growth from a country that was hardly on the solar map a few years ago.

With system sales such a big part of companies such as First Solar and SunPower (Nasdaq: SPWRA  ) , it's tough to compare quarters, but there isn't a lot to be smiling about here. If First Solar is having margins squeezed to 36.5% from 48.3% a year ago despite a strong systems pipeline, Chinese manufacturers will feel it even more. Trina Solar (NYSE: TSL  ) , JA Solar (Nasdaq: JASO  ) , and Yingli Green Energy (NYSE: YGE  ) can't adjust panels to project development and will have to lower prices to keep inventory from piling up.

Foolish bottom line
First Solar's management anticipates conditions will improve throughout 2011 and is planning to sell some very large systems developments. As earnings season moves on, I'll be keeping an eye on just what companies are expecting for the rest of the year and how much they've adjusted to the new conditions. In uncertain times for the industry, First Solar is still one of the best bets out there.

Interested in reading more about First Solar? Click here to add it to My Watchlist to find all of our Foolish analysis on this stock.

Fool contributor Travis Hoium owns shares of First Solar, SunPower, and has sold put option in SunPower. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

Motley Fool newsletter services have recommended buying shares of First Solar. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1534481, ~/Articles/ArticleHandler.aspx, 10/23/2016 4:00:44 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 1 day ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 4:00 PM
FSLR $42.25 Up +0.17 +0.40%
First Solar CAPS Rating: ***
JASO $6.34 Down -0.13 -2.01%
JA Solar Holdings CAPS Rating: **
SPWRA.DL $0.00 Down +0.00 +0.00%
SunPower Corporati… CAPS Rating: **
TSL $10.41 Down +0.00 +0.00%
Trina Solar CAPS Rating: **
YGE $3.96 Down -0.06 -1.49%
Yingli Green Energ… CAPS Rating: *