(First Solar earnings story updated for with analyst commentary)NEW YORK ( TheStreet) -- First Solar easily beat Street expectations for the second consecutive quarter, reporting earnings per share of $1.84 and revenue of $587.9 million for the second quarter 2010, yet the reaction from investors was anything but a round of applause. First Solar shares were down more than 6% early on Friday, mirroring performance in the after-hours session on Thursday when the results were released. Last quarter, after a big beat, First Solar shares gained $22 on the morning after its after-market earnings report. One big issue that First Solar bears had expected, and which showed up in the earnings and conference call, was a spate of settlement charges related to problems with solar modules manufactured between June 2008 and June 2009. First Solar referred to the issue with warranty settlements as a "manufacturing excursion" that impacted 4% of its volume produced during that one-year period. The Street consensus was for First Solar earnings of $1.60 on revenue of $543 million. Yet the whisper number was closer to $2, as earnings estimates had become stale, according to one analyst. With demand for modules in Europe high, some First Solar watchers expected straight module sales to lead to an easy beat of the Street. First Solar upped its full year earning guidance from a range of $6.80 to $7.30, to a range of $7 to $7.40. First Solar revenue guidance for the full year was taken down a notch, from a high-end range of $2.7 billion last quarter, to a high-end of $2.6 billion in the second quarter. First Solar said in its earnings release that the revenue revision reflected pushing more solar module capacity from its systems business to Europe, to meet stronger module demand from European customers. First Solar gross margin narrowed to 48.3% from 56.7%, the fourth consecutive decline in First Solar's consolidated margin rate. First Solar guided to a full year gross margin decline to a range of 44% to 45%. First Solar was guiding prices, as well as gross margins, down for the remainder of the year. Yet First Solar shaved 5 cents off its PV module manufacturing cost to 76 cents per watt in the quarter.