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First Solar Beats Street: No After Hours Pop

First Solar beats the street with its fourth quarter earnings, but early after hours trading did not indicate a rally for First Solar shares among solar investors.

TEMPE, Ariz. (


) -- First Solar's earnings are out, and as expected, the fourth quarter was good to the U.S. bellwether solar stock. First Solar beat street estimates on both fourth quarter revenues and earnings per share.

First Solar had earnings per share of $1.65 per share in the fourth quarter, versus street consensus estimates of $1.50 to $1.52 per share.

Fourth quarter revenues of $641 million bested a street call of $581 million.

The big quarter from First Solar was no major surprise, as strong earnings from solar companies has been the anticipation of most street analysts.

Even analysts who have been more bearish on First Solar, such as Mehdi Hosseini of FBR Capital Markets, wrote in his First Solar preview, "We expect the company to meet or exceed our in-line with consensus revenue and earnings per share estimates."

First Solar net income for the fourth quarter was $141.6 million, compared to net income of $153.3 million or $1.79 per share in the third quarter of fiscal 2009, and net income for the fourth quarter of fiscal 2008 of $132.8 million or $1.61 per share.

First Solar reiterated its guidance for 2010, which it had originally released during an investor day in New York City in mid-December.

First Solar forecasts net sales of $2.7 to $2.9 billion. Earnings per share is projected in the range of $6.05 to $6.85 -- versus a street estimate of $6.37. Total capital spending is projected to range from $500 to $550 million, including its Malaysian plant expansion.

The capital spending guidance has been a bone of contention between First Solar and some analysts, who maintain that to maintain its growth stock profile, First Solar needs to be spending even more than the $550 million higher-end of its guidance range.

Thursday's reiteration of that capital spending guidance should not present a trigger for investors who already are on one side of the fence or the other in terms of the First Solar outlook.

In after hours trading, however, First Solar shares were down more than 6%, even with its earnings outperformance. As First Solar has been on a short-leash with many of the technology growth investors that made tons of money on the stock when it was the $300 per share solar sector high-flyer, it is possible that the after hours activity indicates that the big fourth quarter expectations for the solar sector in general, were even bigger for First Solar, and just beating the street was not enough.

First Solar is expected to be under serious average sales price pressure in 2010 -- FBR Capital Markets is estimating a module ASP decline of 20%-25% -- and even though that is nothing new for First Solar, possibly investors wanted to see more bang for their buck in the fourth quarter than they got. Even in beating street estimates, First Solar's fourth quarter earnings trailed third quarter earnings of $1.79 per share.

What's more, in the presentation that First Solar prepared for its Web site, the U.S. bellwether solar stock said global supply will likely exceed demand in the second half of the year, and that silicon module pricing is likely to decline further in the second half.

-- Reported by Eric Rosenbaum in New York.


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