Three major solar PV companies reported earnings after markets closed yesterday, and the final score does not look promising for the solar PV makers. First Solar Inc. (NASDAQ: FSLR) and MEMC Electronic Materials Inc. (NYSE: WFR) lowered guidance, while GT Solar International, Inc. (NASDAQ: SOLR) posted better-than-expected profits and a record backlog of orders.

There was no good news for Chinese solar makers either, even given news earlier in the week of the government’s adoption of a higher feed-in tariff for solar generation. JA Solar Holdings Co., Ltd. (NASDAQ: JASO), JinkoSolar Holding Co., Ltd. (NYSE: JKS), LDK Solar Co., Ltd. (NYSE: LDK), Trina Solar Ltd. (NYSE: TSL), Suntech Power Holdings Co. Ltd. (NYSE: STP), and Yingli Green Energy Holding Co. Ltd. (NYSE: YGE) all finished lower yesterday and are all anywhere between -16% and -33% lower for the past month.

The major issues in the solar PV market were identified at least a year ago, but the reality is perhaps worse than anticipated. Massive expansion in production capacity coupled with reduced incentives in Europe have driven margins into the cellar. First Solar reported EPS of $0.70, considerably below EPS expectations of $0.92, and revenue totaled $533 million, well below estimates of $582 million.

And among US solar PV providers, First Solar is perhaps the best. SunPower Corp. (NASDAQ: SPWRA) is trading about-20% below its price of one year ago, even following a massive investment by Total SA (NYSE: TOT). Other US solar PV makers, Evergreen Solar, Inc. (NASDAQ: ESLR), Energy Conversion Devices Inc. (NASDAQ: ENER) and Ascent Solar Technology, Inc. (NASDAQ: ASTI), are all trading below $1/share and are no more than marginal players any longer.

GT Solar, and to some degree MEMC, have the advantage of not producing solar modules and panels. GT Solar’s share price has risen around 50% in the past year on the strength of orders for its solar PV manufacturing equipment. That won’t last forever, but it looks good now. MEMC is holding its own on wafer production and sales, but the glut of solar panels will chip away at this stock over the next few months.

The solar sector has gone from being a growth area to something less than even a value play. The enormous increase in manufacturing capacity that is taking place this year will take several years to stabilize with demand, which is driven more by government policy and incentives than anything else.

Some of the weaker US and Chinese players are destined either to be acquired or to just fade away. In the US, First Solar and SunPower look to be the only long-term survivors. In China, it’s anyone’s guess because so much depends on influence and connections with the government and with government-controlled banks. The recent accounting issues with Chinese solar companies will continue to be a weight unless and until the government brings accounting practices more in line with more widely accepted standards.

First Solar shares are down about -2.5% in the first hour of trading this morning, to $105.26, after setting a new 52-week low earlier, and the shares now trade in a 52-week range of $103.82-$175.45. If First Solar can avoid falling below $100/share today, that will be a victory. The Guggenheim Solar ETF (NYSE: TAN) is down about -1.75%, at $5.65, after posting a new 52-week low earlier this morning of $5.60.

Among the Chinese companies, JA Solar has put up a new 52-week low of $4.05 this morning, before recovering slightly to $4.09, down about -3.5%, with a new range of $4.05-$10.24. JinkoSolar is off more than -10%, to $17.75, in a 52-week range of $17.30-$41.75. LDK Solar is essentially flat, at $6.00, in a 52-week range of $5.69-$15.10.

MEMC is also down more than -3%, having posted a new 52-week low of $5.82, against a 52-week high of $15.04. Only GT Solar is showing some positive news, up more than 2%, at $12.07, in a 52-week range of $6.65-$17.50.

Paul Ausick

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