This week, we got our first peek into fourth-quarter earnings in the solar industry. SunPower (SPWR -2.21%) released earnings on Thursday after the market closed, and even though it beat earnings estimates the stock was down on Friday.

Here are the details from SunPower and what else happened this week in solar.

SunPower's fourth quarter
This is becoming like a broken record for SunPower. Beat earnings estimates by a wide margin; stock falls immediately.

SunPower reported GAAP revenue of $678.5 million and a net loss of $144.8 million, or $1.22 per share. GAAP numbers include stock options and restructuring expenses and account for systems differently, so the company also provides non-GAAP numbers. These are important, because they pull out restructuring, which will largely end this quarter, and account for systems as they are completed.  

On a non-GAAP basis, the company had a gross margin of 18.7%, another solid increase, and reported an $0.18-per-share profit. This performance beat the top of SunPower's own estimate of gross margin of 14% to 16% and was near the top of the company's earnings guidance.  

Overall, the fourth quarter showed progress, but revenue was light and even earnings numbers didn't blow me out of the water. The better news is that SunPower expects non-GAAP gross margin to increase to 18% to 22% next quarter and for earnings per share to come in between $0.05 and $0.20. The company has had a habit of regularly beating its own estimates recently, so we should see at least flat numbers next quarter.

We should also watch regional results. Since Europe is struggling and companies are fighting based on cost in many cases, gross margin fell to -49.1% in the quarter, dragging on results. The good news is that growth markets were very strong, posting gross margins of 28% and 22.2%, respectively. SunPower expects to get Europe back to breakeven by the end of the year, but growth is in the Americas and the Asia-Pacific region, and SunPower is generating a nice profit there.

Looking forward, the second half of 2013 is expected to strengthen, which is something we've heard industrywide. CEO Thomas Werner put it this way in the conference call: "We see a significant increase in 2013 non-GAAP earnings per share when compared to 2012." The company reported a profit of $0.18 per share in 2012, so a "significant increase" would be huge for the company and the stock. A start of up to $0.20 in EPS in the first quarter and a stronger number in the second half would be great.

I don't think it's out of the question for SunPower to generate a non-GAAP profit of $1 per share in 2013. If that's the case, the stock trades for about 7.6 times earnings. I'll take that any day for a company with a technology lead in a growth market.

Solar trade war continues
The U.S. government already implemented a tariff on Chinese solar cells after a complaint that the country was subsidizing the industry and dumping products. Now it has its sights set on India.

The government has initiated a World Trade Organization complaint against India for its requirement of locally sourced components. The Solar Energy Industries Association came out this week in support of the U.S. initiation of settlement proceedings, so the industry's biggest association is on board. This is an incremental positive for U.S. manufacturers in particular, since India is a potentially huge market going forward.

LDK Solar lives on
I've been most bearish on LDK Solar (NYSE: LDK) in the solar space because of its massive debt load, but the Chinese government doesn't seem to be willing to give up on the company. Late last week, the company announced a $69.8 million loan from the China Development Bank to upgrade its polysilicon plant. Already, $1.9 billion has been sunk into the plant, and it is driving the company's massive losses.  

I don't know how equity holders will end up with anything in the end, but for now, LDK Solar has a lifeline.

Elsewhere in solar
Here are some interesting items from this week in solar.

  • Trina Solar (NYSE: TSL) announced a new frameless module this week. The company expects the new design to increase performance as well as lower the balance of system costs.  
  • During a three-hour period earlier this week, California generated 1.3 GW of solar power. That's a big jump from as recently as August, when the state generated 1 GW of solar for the first time.  
  • First Solar (FSLR 0.43%) just bought a 50 MW solar project in New Mexico that has a power purchase agreement of 5.79 cents per kilowatt-hour. I should note that the project is eligible for New Mexico's production tax credit and the investment tax credit, so the real cost is a couple of cents per kWhr higher. Still a very low number.  
  • This week, Greentech Media put out an article predicting that solar panels will cost $0.42 per watt by 2015. That's down from $1.29 as recently as 2009, so the pace of cost reductions is incredible. The article cites Trina Solar, JinkoSolar (JKS -0.46%), ReneSola, and Yingli Green Energy as leaders that may be able to achieve these costs. In my opinion, these are all risky, but JinkoSolar has the best balance sheet and may be able to survive when there is a solar shakeout.