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First Solar

(FSLR) - Get Report

reported fourth quarter earnings of $1.80 on revenue of $610 million, a little above the Street on the bottom line while missing on revenue.

An unanticipated acceleration of the 2011 pricing model to December 2010 was embedded in the lower sales figure. First Solar noted in its earnings presentation that the 2011 pricing in December "yielded acceptable returns to project investors and partners."

TheStreet consensus for the fourth quarter was earnings of $1.76 on revenue of $647 million.

First Solar raised its full year 2011 guidance to a range of $9.25 to $9.75. At its annual investor day in December, First Solar guided to 2011 revenue of $3.7 billion to $3.9 billion on earnings per share of $8.75 to $9.50.

In its new full year 2011 guidance, First Solar narrowed the revenue outlook to $3.7 billion to $3.8 billion.

The full year 2011 Street consensus has been for earnings per share of $9.10 and revenue of $3.8 billion.

First Solar said revenue of $610 million decreased $188 million from the third quarter of 2010 due to the timing of system sales and "the December implementation of 2011 pricing, partially offset by an increase in volume." Sales were lower overall compared to the year ago fourth quarter, too, "due to decreased systems revenue and reduced module prices, partially offset by higher volume."

While lower system sales as compared to the third quarter led to the First Solar revenue being lower quarter over quarter, an expected increase in module sales as European conditions led by Italy were strong, led to First Solar gross margin 8% higher (48.7% versus 40.3%) in the fourth quarter than the previous quarter.

With First Solar already trading at an 18-month high, headed into its earnings the Street bet was that it might take a beat and significant raise to rally shares. All of the solar module companies that have already reported earnings have posted strong numbers.

SunPower recently hiked its full year 2011 guidance from its November investor day forecast, arguably raising expectations that First Solar would follow with a guidance raise as well.

It's not always enough for First Solar to raise guidance. There had been whispers of an earnings guidance raise for 2011 as high as $10 to $11 into First Solar earnings.

First Solar shares have gained 27% year-to-date into earnings, though the shares have fallen from the 18-month high of $175 hit concurrent with the spike in the price of oil.

Trading in solar stocks has been volatile this week. After a huge run in the sector as the oil prices rose throughout February, solar stocks tanked earlier this week along with the equities markets on fears that an ever-higher price of oil would sink the global economy. Yet in the past two days as the Nasdaq has rebounded, solar stocks have rallied. First Solar closed on Thursday up by 1.2%.

First Solar alluded to the biggest risk in the solar sector, in noting in its earnings presentation that contemplated feed-in tariff changes and caps in certain European markets on solar installations should create strong conditions in the first half of 2011 but tight economic conditions in the second half of the year. First Solar's outlook maintains that it pricing will drive sales of all of its expected production in 2011.

First Solar shares were lower in after-hours trading, though it opened down by 5% and that narrowed to as little as 2% in after hours trading.

-- Written by Eric Rosenbaum from New York.


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