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Solar Stock Losers: Power-One

Stocks in this article: PWER AEIS SMTGF

(Power-One, solar losers story updated to reflect Q-Cells comments on 2011, Friday trading)

NEW YORK ( TheStreet) -- It's been quite a ride up for solar inverter company Power-One (PWER) in 2010, with a year-to-date return of 140%. Some recent negative pressure on Power-One shares, including big selling on Wednesday, Thursday, and early on Frida, suggests that the solar inverter company is firmly on the radar screen of investors, from the longs to the shorts, who like to dabble in volatile solar stocks.


By the close of trading on Wednesday, Power-One shares were down more than 13.5%. On Thursday, Power-One followed up its big losing day with another near 10% drop and 18 million shares traded. On Friday morning, when Power-One bulls would say that the solar inverter company's shares were clearly in oversold territory, Power-One opened trading down by between 4% and 6%, with a million shares trading hands in the first minutes of the market open.

On Wednesday, it was a report from German solar inverter giant SMA Solar that was responsible for the Power-One share plummet. On Friday, the CEO of Germany's largest solar module maker gave an interview to Reuters. The Q-Cells CEO expressed confidence about the rest of 2010 -- no surprise to anyone -- but also offered a mixed view on 2011, which has been the reason for the unrest in Power-One shares.

In the report from German solar inverter giant SMA Solar on Wednesday, the largest solar inverter company by far issued revised earnings guidance on Wednesday -- ahead of its planned annual Capital Markets Day on Thursday -- that stated operating margins would drop next year as falling subsidies cause the solar market to shrink, according to a recap of the SMA Solar commentary on Reuters. SMA Solar shares were trading down in Thursday's European market trading action, losing close to 3% after a 5% drop on Wednesday.

The Q-Cells CEO told Reuters on Friday, "I still think that 2011 will be a challenging year. But I'm not that skeptical anymore for the first quarter." Most of the solar inverter stocks opened lower on Friday morning, but none with losses in the range of Power-One's continued decline. Q-Cells shares rallied in German trading on Friday, up more than 3%.

Power-One management has stated publicly that its current margins have to come down from the nosebleed levels, but Power-One has also been on the bull side of the solar demand story, contending that other geographies will make up for the feed-in tariff declines in Germany, and expected cuts in Italy.

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