First Solar Outlook Disappoints; Shares Skid

Source: First Solar

First Solar swung to a net profit in the fourth quarter from a loss a year earlier but the company's revenue and outlook fell short of expectations.

Shares tumbled in extended-hours trading. (Click here for the latest after-hours quote.)

The company's outlook was a big miss: For the first quarter, it expects earnings to be between 70 and 90 cents a share and for revenue to be between $650 and $750 million. Analysts currently expect earnings of 89 cents a share on revenue of $827 million, according to a consensus estimate from Thomson Reuters.

"We expect the market will remain turbulent for some time to come, but we have seen some evidence of improvement and believe we have the right strategy in place to retain our industry leadership by providing the best value for our customers," First Solar CEO Jim Hughes said in a statement.

In the fourth quarter, First Solar swung to net income of $154.2 million, compared with a net loss of $413.1 million in the year-earlier period.

Excluding items, earnings jumped to $2.04 a share from $1.26 a share in the year-earlier period. The earnings exceeded Wall Street's forecast of $1.75 a share, according to a consensus estimate from Thomson Reuters.

Revenue increased to $1.08 billion from $660 million a year ago, but was below the $1.32 billion analysts had expected.

First Solar, like others in the industry, has struggled due to a sharp drop in the price of solar panels that has squeezed profit margins and forced companies around the world to shut down plants or, in many cases, go out of business.

The Tempe, Arizona, company has shifted its focus over the last year to markets that do not require government subsidies to make solar power affordable, such as the Middle East, India and Chile.

First Solar, however, is continuing to build a string of massive solar power projects in the U.S. West, including the 550-megawatt Topaz solar farm in central California.

But two major planned projects—the 300 MW Stateline Solar Farm in California and the 250 MW Silver State South project in Nevada—are still awaiting permits, and it is unclear when the company will recognize revenue from them.

"It was going to be difficult for First Solar to give any guidance that implied any contribution from those projects,'' Pacific Crest analyst Ben Schuman said.

Schuman added that the company was also likely awaiting the outcome of a trade dispute between the European Union and Chinese panel manufacturers, and a U.S. challenge at the World Trade Organization to India's national solar program.

Investors pushed solar company shares to record lows last year, but they have rallied sharply since late in 2012. First Solar shares have soared 178 percent since June of last year.