North Coast Solar Stocks

July 30, 2009

FSLR: Reiterates ‘09 View, Stock Down on Germany Woes

Filed under: FSLR — Tags: , , , , , — Jason @ 5:29 pm

Posted by Tiernan Ray
barrons.com

Shares of solar panel technology maker First Solar (FSLR) are reversing course this evening, falling to $170 after briefly going as high as $189 following a clean Q2 beat. What’s spooked people are the company’s remarks on a conference call this evening about growing uncertainty in its German market.

The company has seen increasing price-cuts among competitors selling into Germany’s solar power market. Although First Solar makes panels from a thin-film semiconductor technology, it started to see trouble in the German market from manufacturers hit with a glut of polysilicon-based product and slowing of new panel projects, said CEO Mike Ahern.
A pronounced increase in price cuts in Q2 came about because “the crystalline silicon module oversupply as feedstock became more available, and then some aggressive pricing behavior on the part of some manufacturers in order to drive sales into the German market,” said Ahern.

That, he said, led to, “deferred project equity investment that I alluded to earlier where people began to sit on the sidelines and wait to see how the price reductions played out.”

Ahern said it’s not sure when such conditions will change in Germany. As a result, the company is “willing to reduce price … where price is the constraint” in Germany. And to do so, the company introduced — ta da! — rebates that it will pay when a project is completed.

The combined effect of rebates, uncertain pricing competition in Germany, and uncertain project ramp-ups means the company is sticking with its 2009 forecast of $1.9 billion to $2 billion in revenue despite the Q2 beat.

Or, as Ahern put it, “The net effect of this — I mean, we had to take some assumptions about the overall impact on it. The net guidance, or the guidance in total for 2009 remains unchanged.” ”

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