Rather than do a high-level review of the week's solar news, I'm going to focus on just two pieces of news that hit the sector hard late in the week.
First, of course, was First Solar's
That doesn't sound like the end of the world, but the bottom line is that we could get into another oversupply situation. Suntech Power
Given First Solar's differentiated offering from all the crystalline solar modules out there, I don't believe it would be the hardest hit by a further round of price competition. However, collapsing prices could arguably erode any remaining advantage the company's thin-film panels have over conventional modules offered by the likes of Trina Solar
A lot of media outlets and analysts covering First Solar's results are pointing to a drop in the solar player's margins as a major point of concern. The company has long made it clear that yesterday's unsustainably high margins will fall. The focus is on generating economic profits, not margins. I do see reasons to be cautious on First Solar, but not because gross margins have fallen to 41.5%.
When a solar company operates this close to the edge of profitability, then yes, margins really should preoccupy investors. They are probably reacting appropriately to today's news.