First Solar Exceeds Street Expectations

First Solar easily beats Street expectations in its first quarter earnings.
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SAN JOSE, Calif. (

TheStreet

) --

First Solar

(FSLR) - Get Report

has beat the Street heftily in earning $2 per share in the first quarter, as increased volume and higher module prices led to earnings per share 37 cents above the Street consensus. First Solar also had a one-time tax benefit of 14 cents in its earnings, related to its Malaysian operations tax incentives.

First Solar revenue of $568 million in the first quarter was also ahead of the Street consensus of $545 million.

First Solar first quarter 2010 net sales declined $73.3 million from the fourth quarter of 2009, primarily due to a shift from turnkey system sales to module sales, the solar company said.

First Solar announced on Wednesday an acquisition of a 1.1 gigawatt pipeline from NextLight, a solar project develop in the southwestern U.S. Some solar investors were viewing the

First Solar move as a slap in the face of

SunPower

(SPWRA)

.

First Solar capacity expansion beyond the eight new lines planned for the beginning of 2010 was an issue that analysts were curious about headed into the earnings given the acquisition announcement. First Solar stated in its earnings release that an additional four line manufacturing plants with an annual capacity of over 220 megawatts at the first quarter 2010 line run-rate will begin production in the fourth quarter of 2011.

First Solar said the $285 million cash purchase of NextLight's pipeline would result in a 9- to 10-cent hit on 2010 earnings.

The earnings hit to be exacted by the acquisition did not stop First Solar from revising its guidance upward in its first quarter earnings release. Earnings per First Solar share for 2010 are now projected in the range of $6.80 to $7.30, and include the 9- to 10-cent per share dilution for the pending acquisition of NextLight.

In its February guidance, First Solar projected earnings per share of $6.05 to $6.85 in 2010.

First Solar's net sales estimate of 2.6 billion to $2.7 billion is slightly below its former estimate of $2.7 to $2.9 billion.

First Solar said the big earnings revision reflects "reallocation of module capacity from our systems business to meet stronger module demand by our European customers."

First Solar also upped its capital spending to a range of $625 million to $650 million, up from a range of $500 million to $550 million.

First Solar's operating cash flow estimate of $725 to $775 million was also slightly below its previous guidance of $730 million to $790 million.

While First Solar shares were trading up more than 3% in the after-market session Wednesday.

Some analysts remain unconvinced of First Solar as short-term buy, but are

more bullish on First Solar's long-term outlook as a solar stock play as a result of Wednesday's acquisition.

-- Reported by Eric Rosenbaum in New York.

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