Less than a month after SunPower's
In the current deflationary dance, the price of just about everything (aside from U.S. Treasuries) is getting pummeled. Solar panels are no exception. On its third-quarter conference call, JA Solar
Given that the low-cost cell crafter is whittling down higher-cost inventories, the fourth quarter will not be pretty. Gross margin guidance is in the range of 5% to 7%, which translates to roughly break-even non-GAAP earnings.
A few things need to happen for JA Solar's business to stay on track in 2009 and beyond. Unlike Yingli Green Energy
In order to maintain reasonable margins, then, JA needs to pay less for its own inputs, namely polysilicon wafers. This is where the company's relationship with the JingLong Group -- a leading monocrystalline polysilicon producer -- will come in very handy. Another of JA's wafer suppliers is ReneSola
Trumping these price adjustments is, of course, ongoing strong demand for solar products globally. The solar market "panic" that JA identified on its earnings call has led the firm to temporarily idle fully 40% of its production lines. That's a pretty scary statistic, and I would encourage Foolish investors to take a cautious stance here. If economies like Portugal, Italy, and Greece prove to be complete basket cases, I have a hard time seeing the bullish demand scenario for 2009 playing out exactly as described by the sunny solar forecasts.