Several Surprises From ReneSola

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Yesterday, ReneSola (NYSE: SOL) rolled out a trio of tidings.

In one announcement, the company updated its third-quarter and full-year outlook. Taking a good news/bad news approach, ReneSola's CEO cited evidence of a "steady rebound in the global solar marketplace."

Of course, the rebound in solar demand is driven in part by aggressive price competition, which is improving the cost equation for end users like PG&E (NYSE: PCG) and Wal-Mart (NYSE: WMT). While input costs are dropping fast enough to support decent gross margins at shops like Yingli Green Energy (NYSE: YGE) and Trina Solar (NYSE: TSL), the swift decline in average sales prices is still weighing on the near-term revenue outlook for players across the sector. Hence ReneSola's statement that "the improvement in the price of solar products may take longer than anticipated."

It's up to us to puzzle out how long "longer" is, but ReneSola has at least prepared us for a considerably weak fourth quarter. The firm's third quarter revenue outlook now stands at $130 million to $140 million. The company had previously estimated a 60% to 70% improvement over its soft second-quarter revenue, so this doesn't represent much of a tweak. Full-year revenue guidance, on the other hand, was dropped from a range of $500 million to $550 million, to $470 million to $500 million.

In other news, ReneSola is scooping up a company called Dynamic Green Energy for shares and a $10 million convertible note. Dynamic's subsidiary, Jiawei, is a familiar name. The company's performed contract work for SunPower (Nasdaq: SPWRA), and has also teamed up with Evergreen Solar (Nasdaq: ESLR) to manufacture that firm's string ribbon panels in China.

Jiawei manufactures ingots, cells, and modules, so this acquisition helps advance ReneSola's radical reshaping into a vertically integrated solar player. By year's end (and assuming the deal closes), ReneSola now expects to have wafer, cell, and module manufacturing capacities of 900 megawatts, 125 megawatts, and 475 megawatts, respectively.

In its third press release of the day, ReneSola announced a follow-on offering of 14.4 million American depositary shares (ADS). That is a big offering. The firm's U.S. market IPO in January 2008 weighed in at only 10 million ADS!

These ADS come in addition to the 26.8 million ordinary shares ReneSola is issuing to acquire Dynamic Green. Assuming the underwriters exercise their overallotment option, ReneSola will have the equivalent of roughly 100 million ADS outstanding, so be sure to update your valuation accordingly.