The solar jitters are evident today after First Solar (Nasdaq: FSLR) announced quarterly earnings and Italy announced changes to its solar subsidies. After beating analyst's expectations again, First Solar stock is down 5% in trading today. I feel like we've seen this story before.

News from First Solar was mixed, but here are the highlights I took from the release.

Positives:

  • Net income for the quarter was higher than expected at $116.0 million or $1.33 per share. Analysts had expected earnings per share to be $1.16.
  • First Solar reiterated full year earnings guidance of $9.25 to $9.75 per share.
  • Conversion efficiency increased to 11.7%.
  • The company has the flexibility to move 150 megawatts of modules into project developments if sales are soft throughout the year.

Negatives:

  • Cost per watt didn't decline from last quarter -- but did stay constant at $0.75.
  • Gross margin fell 2.9% to 45.8% from last quarter, hurt by falling average sales price.
  • Visibility seems to be getting shorter in Italy and Germany.

The market appears to be reacting to uncertainty again -- but First Solar provides some of the most stable earnings in the industry.

One of the challenges with analyzing manufacturers like First Solar and SunPower (Nasdaq: SPWRA)(Nasdaq: SPWRB) -- which also have project development units -- is the uneven sale of power plants. For example, First Solar expects that only 15% of 2011 sales were made in the first quarter, but the fourth quarter will contain about 40% of sales. The trend is similar for operating income. This partially insulates the companies from drops in demand from places like Italy where manufacturers are having a challenging time selling panels.

Many competitors don't have the same visibility and we already saw LDK Solar (NYSE: LDK) guide lower than they expected internally. There's a likelihood competitors JA Solar (Nasdaq: JASO), Trina Solar (NYSE: TSL), and Yingli Green Energy (NYSE: YGE) will find similarly disappointing results as average sale prices decline.

Foolish bottom line
Decreasing sales prices aren't a surprise in solar, and this has already been priced into shares. But solar manufacturers are in a situation where falling costs are struggling to keep up with falling feed-in tariffs in Europe. Furthermore, new markets like the United States and India are yet to be a significant portion of the market. It will be a turbulent year as the industry eases its reliance on Germany and Italy.

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

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

First Solar is a Motley Fool Rule Breakers selection. 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.