This morning’s downgrade by Morgan Stanley of global growth prospects has started the market off on the wrong foot, sending equities down about -3% in the first half hour of trading. Solar shares are doing at least twice as poorly following an earnings report from JA Solar Holdings Co. Ltd. (NASDAQ: JASO) that was surprising only because it was worse than the preliminary report the company released just last week.

JA Solar had predicted that it’s operating margins would be negative in the low single-digit range. That number actually came in at -2.7%, about as expected. However the company posted a loss per ADR of -$0.22, compared with an expected loss of -$0.03. JA Solar also missed a consensus revenue estimate of $419 million, turning up sales of $413 million.

Today’s earnings report follows poor earnings and guidance from Trina Solar Ltd. (NYSE: TSL), ReneSola Ltd. (NYSE: SOL, First Solar Inc. (NASDAQ: FSLR), and Canadian Solar Inc. (NASDAQ: CSIQ). Suntech Power Holdings Co. Ltd. (NYSE: STP) reports earnings next week and the consensus estimate includes EPS of $0.16 on revenue of $800 million.

The second calendar quarter of 2011 has been beyond unkind to the solar makers. The slowdown in purchases from Europe really took hold during the quarter. JA Solar, for example, shipped just 401 megawatts of solar cells in the second quarter, down 11% sequentially. The company expects to sell 450-470 megawatts in the third quarter, and forecasts full-year sales falling from a previous estimate of 2,200 megawatts to 1,800 megawatts.

JA Solar will be lucky if the drop is only that much. Like the other solar players, the company believes that shipments will improve in the second half of 2011. Maybe — but if they do it will be at the expense of margins.

By now the drumbeat of ‘oversupply, oversupply’ has been pounded out so often that just about everyone except the solar makers themselves have gotten the message. Selling more may keep revenues up and inventory levels down, but profits will not improve. It simply can’t happen, especially as the solar makers bring even more manufacturing capacity online.

After the first hour of trading this morning, JA Solar is down nearly -9%, at $3.51, in a 52-week range of $3.28-$10.24. Trina is down nearly -5.5%, at $14.21, in a 52-week range of $13.02-$31.89. ReneSola is off more than -7.5%, at $3.13, in a 52-week range of $2.65-$15.34. Canadian Solar is off nearly -5%, at $7.05, in a 52-week range of $6.33-$17.63. Suntech is down about -5.75%, at $5.76, in a 52-week range of $5.45-$10.83. First Solar is doing slightly better, down less than -3.25% at $96.35, in a 52-week range of $92.75-$175.45.

The Guggenheim Solar ETF (NYSE: TAN) is down nearly -6.5%, to $5.26, in a 52-week range of $5.08-$9.34.

Paul Ausick

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