JA Solar Beats, Will Hike Spending

JA Solar beat the Street in its first quarter earnings, as a short-term demand frenzy in solar continues to spur on makers of solar cells and solar wafers.
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SHANGHAI, China (

TheStreet

) --

JA Solar

(JASO)

beat the Street expectations, with earnings of 24 cents per share and revenue of $279 million. The Street had been expecting earnings of 18 cents from JA Solar on revenue of $265 million.

Given the stronger-than-anticipated pricing for solar cell and solar wafer makers in the first half of the year, driven by European demand, a beat from JA Solar was not a huge surprise. JA Solar had already pre-reported that it expected a record level of shipments in the first quarter, too. JA Solar total shipments in the first quarter of 2010 were a record 272 megawatts.

JA Solar shares were up early in pre-market trading on Tuesday, but after Monday's big rally in solar on the European bailout package, the rise in JA Solar shares on Tuesday morning was smaller, between 2% and 3%.

By Tuesday morning, Monday's overall market bullishness was muted, and the situation in Europe that had wreaked havoc with solar shares last week was again beset with uncertainty, as opposed to Monday's euphoria over the European Union debt bailout. Asian markets ended down on Tuesday.

JA Solar gross margin in the first quarter was 22.9%, up from 20.5% in the fourth quarter, and exceeding the Chinese solar company's guidance of 20%.

JA Solar raised its outlook for the full year of 2010, expecting shipments to exceed 1 gigawatt, compared with prior guidance of 900 megawatts. Shipments in the second quarter of 2010 are expected to be approximately 275 MW.

JA Solar also announced a significant increase in capital expenditures, from $130 million to between $220 million and $250 million, as it brings its total capacity as high as 1.5 GW. The Chinese solar company said that it will use existing cash balance, operating cash flow and credit from Chinese banks to fund the expansion.

-- Reported by Eric Rosenbaum in New York.

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