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 solar manufacturer Canadian Solar (NASDAQ:CSIQ) dropped 10.7% today after reporting earnings and giving first-quarter guidance.

So what: Revenue was up 6% sequentially, to $519.5 million, on a huge jump in shipments from 478 MW to 621 MW. But a smaller share of system sales resulted in a margin decline of 0.9%, to 19.5%, and an earnings drop from $0.56 to $0.39 last quarter. 

Now what: Declining results are concerning, and it looks like they'll continue because management only expects to ship 470 MW to 490 MW this quarter, and gross margin of just 14% to 16%. Canadian Solar has been reliant on extremely high margin solar projects in Canada to boost earnings, and now we're seeing just how much they goosed results last year.

Bad weather in Canada may delay those projects further, and that's one driver of some of the decline in margins expected in Q1. I still think this is one of the better Chinese solar manufacturers, but if it can't cut costs and begin selling modules at a better margin, it won't survive without subsidized Canadian projects.