In its first-quarter earnings release, Solarfun Power
The bad news isn't news at all if you've followed my coverage of solar earnings this season. SunPower
To quantify the bad news a bit, Solarfun's average sales price (ASP) fell 17.5% sequentially to $2.78 per watt. Solar module shipments fell 25% sequentially to 35.7 megawatts. That's a touch better than guidance, but there were only a few days remaining in the quarter when that guidance was issued, so don't get too excited.
Oh, too late. You -- or whoever was buying yesterday -- bid up the stock by 27% in a steamy trading session.
I guess that brings us to the good news. There are a few bits, actually.
First, Solarfun's costs are dropping faster than its ASPs. This is quite different from what's occurring in the oil patch, where service costs are more slowly adjusting to cratered commodity prices. With this rapid cost structure adjustment, Solarfun's already reporting better gross margins than last quarter, and (gross) profitability is poised to plump up further. Management says that gross margins should "approach or reach low double digits for the full year."
Second, polysilicon prepayments have until recently been something of a working capital vortex for PV players like Trina Solar
Finally, in Solarfun's judgment, the first quarter should mark the low point in demand for the solar industry as a whole. The company expects its own shipment volumes to improve by at least 15% to 20% in the second quarter and is optimistic about demand returning in the back half of the year.
While other solar companies like First Solar