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Thursday, October 27, 2011

First Solar announces positive earnings, early and after dumping CEO,

After dumping CEO, First Solar announces positive earnings early - SiliconValley.com:

TEMPE, Ariz. -- First Solar surprised investors for the second time in as many days Wednesday, releasing its third-quarter earnings a week early after the sudden departure of its CEO sent the company's stock plunging 24 percent Tuesday.

If the early release was intended to halt the stock's slide, it was a shrewd decision. In the first hour of trading, shares rose 14 percent, cutting the previous day's losses in half even though the results from the third quarter demonstrated mostly how tough the market has become for U.S. solar companies.

First Solar's net income rose 11 percent, to $196.5 million, or $2.25 per share, from $176.9 million, or $2.04 per share, a year earlier. However, this year's net income got a $10 million bump thanks to a reduction in income tax expenses.

Even then, profits were well below Wall Street expectations of $2.59 per share, according to a poll by FactSet. And analysts have been lowering their expectations throughout the month.

The nation's largest solar company sharply reduced its per-share guidance as well, as was expected by many after the departure of CEO Rob Gillette. But it was clear that the bad news was not quite as bad as many investors had expected.

Revenue rose 26 percent, to $1 billion, matching Wall Street expectations.

Founder Mike Ahearn, who has stepped in as CEO, said the board "believes First Solar needed a leadership change to navigate through the industry turmoil and achieve our long-term goals."

The solar sector is being hit hard by the economic downturn in the U.S., which has squeezed funding for alternative energy projects, as well by as blistering competition from China.

Making matters worse, the collapse this year of Fremont solar firm Solyndra, which received a half-billion in loan guarantees, has put a spotlight on the entire industry. Solyndra was one of three solar companies to seek bankruptcy protection within two months, and now GOP critics are seeking an end to solar loan guarantees for the industry.

First Solar is not the same, however, because as rough as the market has been, the Tempe, Ariz., company has been profitable. That does not mean it is not being squeezed.

The company now anticipates earnings of $6.50 to $7.50 per share, down from previous guidance of between $9 and $9.50. It expects that operating income will total $650 million to $760 million, compared to estimates of $871.7 million.

The company said it is cutting capital spending and will use the savings to invest in new markets, sales and research and development. First Solar is increasingly focused on emerging markets.

First Solar remains a powerhouse in the industry and many experts gave the company the benefit of the doubt after a volatile week.

First Solar maintains some of the lowest costs in the business and it has the scale that others do not.

Nov. 3 First Solar conference with analysts and investors to learn more about what is happening in the head office.

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