First Solar Lowers Outlook, Cuts Jobs (FSLR, TSL, YGE, LDK, JASO)

Thin-film solar panel maker First Solar Inc. (NASDAQ: FSLR) has conceded the inevitable. The company this morning lowered its sales and profit outlook for this year, announced it would cut 100 jobs, and offered relatively modest guidance for 2012. The announcement has hit the shares of Chinese competitors like Trina Solar Ltd. (NYSE: TSL), Yingli Green Energy Holding Co. Ltd. (NYSE: YGE), LDK Solar Co. Ltd. (NYSE: LDK), and JA Solar Holdings Co. Ltd. (NASDAQ: JASO).

First Solar lowered 2011 sales from $3-$3.3 billion to $2.8-$2.9 billion and cut its profit estimate from $6.50-$7.50/share to $5.75-$6.00/share. The company attributed the drops to “continued delays of certain projects in First Solar’s systems business due to weather and other factors.”

One of those other factors has got to be the explosion of manufacturing capacity for solar PV panels and the concomitant drop in panel pricing. Another is the looming expiration of a tax grant program in the US, which threatens to curb new projects going forward.

For 2012, First Solar guided revenue of $3.7-$4 billion, lower than a consensus estimate of $4.06 billion. The company estimates EPS of $3.75-$4.25, where analysts have been projecting EPS of $7.46.

First Solar also says it is altering its business model, according to the company’s CEO:

[W]e are recalibrating our business to focus on building and serving sustainable markets rather than pursuing subsidized markets. By channeling our core strength in utility-scale PV systems to markets with immediate need for mass-scale renewable energy our goal is to earn substantially all of our new revenues from sustainable markets by the end of 2014.

What he means is that rather than aim at large utility-scale projects that look set to lose their federal incentives, First Solar is going to go after the residential and commercial rooftop solar installation market. That market has finally discovered a financing scheme that does not depend on subsidies, relying instead on bank financing and power purchase agreements for profits.

Whether or not First Solar can make this transition remains to be seen. To help the process along, the company has appointed a new president of global business development. There’s also a shakeup in First Solar’s finance team, where the chief accounting officer will be leaving on May 1st.

First Solar shares are getting pounded this morning, down nearly -21% at $33.72, a new 52-week low.

Paul Ausick