SAN FRANCISCO and WUXI, China ( TheStreet) -- Suntech Power Holdings ( STP) delivered the gross margin improvement that the street and solar investors were looking for in the fourth quarter. Suntech's gross margins in its wafer business improved to 26.3%, from 20% in the third quarter, and its consolidated gross margin level of 23.8% in the fourth quarter easily beat its 17.8% gross margin number from the previous quarter. Suntech Power shares are up by more than 6% in the pre-market on Thursday. It's a good thing Suntech Power delivered gross margin improvement. Gross margins have been a key factor driving the market reaction to solar earnings so far in this fourth quarter earnings season. First Solar ( FSLR) suffered mightily after its earnings for showing the type of gross margin deterioration that solar investors have feared will be a long-term trend for the bellwether solar stock. Trina Solar ( TSL) even amid record earnings, was slapped by the market for conservative gross margin guidance for 2010. Trina Solar delivered a record quarter, but when it guided first quarter 2010 gross margins to be down down from a record level in the fourth quarter, its shares sank on earnings day. Suntech has, in effect, given the same lower gross margin guidance, however, the 20% target will remain the key, and not the fourth quarter gross margin outperformance. Suntech Power did guide lower in 2010, with gross margin expectations of 18% to 20% in the first quarter. While the shares are up early, 18% might not cut it long-term, with investors. The first quarter of 2010 is expected to be another good one for solar companies, while the second half of 2010 remains uncertain. Therefore, if Suntech comes in at the low-end of its gross margin guidance in the first quarter, that could result in renewed questions about its ability to hit the 20% gross margin bogey. Analysts may continue to zero in on Suntech hitting the 20% high-end of its guidance range in 2010.