A Spark for Yingli Green Energy

If you're looking for sunny guidance, solar's not the place to look. Here are some of the lowlights:

• JA Solar (Nasdaq: JASO  ) withdrew revenue and production guidance, saying it was likely to miss the numbers it issued in February (which had been revised lower).
• Suntech Power (NYSE: STP  ) lowered its full-year shipment guidance to fall in the 600- to 700-megawatt range. The company decided not to provide revenue or gross margin guidance.
• Applied Materials gave guidance that its solar segment's revenue would fall at least 30% from the second quarter.

Joining the rainy parade late last week was Yingli Green Energy (NYSE: YGE  ) , one of the leading Chinese manufacturers of photovoltaic  (PV) products. The company cut its module shipment target to between 450 and 500 megawatts, down from the 550 to 600 megawatts estimated in February. Yingli modestly bumped up its gross margin guidance, but that won't offset such a sizeable drop in volumes.

As for the first quarter, revenue dropped 43% from the previous quarter, which puts Yingli almost on par with SunPower's (Nasdaq: SPWRA  ) quarterly slump. As I said about its American competitor, this is one of the more solid shops, so no one's immune here. Well, almost no one.

So the first quarter stank, and the company's reducing expectations for the rest of the year. Why, then, are shares soaring today?

Like Solarfun (Nasdaq: SOLF  ) before it, Yingli proclaimed that we've seen the bottom in solar, at least for this year. But it's not about what the company says. It's what the customers do. And it looks like solar integrators are taking a shine to Yingli's wares.

With polysilicon and wafer prices plunging, crystalline silicon (c-Si) PV is starting to look a whole lot more competitive with less efficient thin-film modules. One recent indication was Yingli's utility-scale solar supply deal with AES. Thin film and solar thermal had been dominating in this field.

Today, FBR Group downgraded thin-film king First Solar (Nasdaq: FSLR  ) , pointing to further signs of a shift in solar customers' preferences toward c-Si modules. For example, German financier KfW's solar project backlog has shifted from 80% thin film in 2008 to just 55% thin film today.

While project financing may continue to plague the industry as a whole for some time, c-Si players like Yingli and Trina Solar (NYSE: TSL  ) may just emerge from the current crunch stronger than when they entered it.