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 (FSLR -1.46%) dropped 14% today after the company released fourth-quarter earnings.
So what: The report was mixed, with earnings per share of $2.04 beating the $1.75 estimate by a wide margin and revenue of $1.08 billion falling short of the $1.32 billion estimate. The problem is that first-quarter revenue guidance was $650 million to $750 million, below estimates of $822 million, and earnings-per-share guidance of $0.70 to $0.90 was on the low end of expectations.
Now what: First Solar isn't booking enough projects to keep up with what it's building, so the entire business model is coming into question right now. Investors are watching results deteriorate and not seeing the positive future they once thought was possible. I think this quarter exposes holes in First Solar's thin-film product and highlights why the company needs to move beyond being a manufacturer and focus on the systems business.
