First Solar Profits Surge

Shares of First Solar (FSLR Quote - Cramer on FSLR - Stock Picks), much like the products it cranks out, seemed to harness the power of the sun Wednesday on white-hot fourth-quarter earnings.

Shares flared higher by more than 30% after the Phoenix-based company said it made $62.9 million, or 77 cents a share -- a nearly eightfold surge from a year earlier -- against analyst expectations for a mere 53 cents a share, according to Thomson Financial data.

A year ago, the company earned $8 million, or 11 cents a share, after adjusting the share count to what it would have been if the company's initial public offering had taken place at the beginning of 2006. The IPO had launched in November of that year.

CEO Michael Ahearn attributed the stellar results to the company's new solar-module plant in the German city of Frankfurt (Oder), which opened in July of last year, as well as higher manufacturing efficiency overall. First Solar has knocked production expenses down by 12% vs. a year earlier, said the company, ratcheting down to $1.12 the cost of making equipment capable of generating a watt of electricity per year.

In a conference call, Ahearn highlighted that the company has inked take-or-pay contracts (those in which First Solar still gets compensated for covered products that weren't sold) in the fourth quarter that will further enable the company "to expand our production capacity, which is the key driver to our cost-reduction efforts." Ahearn noted that the agreements, which had been previously announced, are worth $5.9 billion through 2012, based on a $1.30-per-euro assumed exchange rate.

Ahearn also said the company sold 75.8 megawatts worth of modules for an average sale price of $2.60 per watt in the fourth quarter as "robust" demand continued to exceed supply.

As for 2008, chief financial officer Jens Meyerhoff predicted full-year sales of between $900 million and $950 million -- a range that's well above the Street's $820.5 million consensus -- partially thanks to an expected second-half upswing from the company's Malaysian facilities.

Meyerhoff added that, due to a "contractual price decline," first-quarter sales should sink sequentially from the $200.8 million fourth-quarter figure. Analysts, who had predicted sales of just $179.6 million in that quarter, are targeting a decline to $160.6 million in the current one.

First Solar shares surged 30.1% to close up $52.90, at $228.46.