February 29, 2012
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of First Solar (Nasdaq: FSLR ) fell 12% today after the company reported weak earnings and lowered guidance.
So what: The company swung to a surprising loss of $413 million, or $4.74 per share, on massive goodwill charges and warranty expenses. Without those adjustments, earnings per share was $1.26, still below the $1.53 analysts had expected.
Revenue guidance for 2012 was revised down $200 million to $3.5 billion-$3.8 billion.
Now what: First Solar is trying to move from highly subsidized markets into unsubsidized markets and would like to focus on utility-scale projects. The problem is, these markets aren't quite ready for prime time, and First Solar is feeling the pinch. Shares still have some value because of the company's massive power plant pipeline, but I'm about ready to write off the module business altogether.
I own shares of First Solar and while I'm not selling today, I will if shares pop at all in coming weeks because I think there are better opportunities in the solar industry.
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