First Solar’s Financial Results Reflect Industry-Wide Woes


First Solar Inc., a Tempe, Ariz.-based cadmium telluride (CdTe) PV module manufacturer, has announced its financial results for the fourth quarter and year that ended Dec. 31, 2011. Because of the company's position as the highest-volume U.S.-based PV manufacturer, its financial results are typically viewed by the industry as particularly telling. Overall, bad news permeated the company's announcements – a performance that was largely expected, given PV market conditions.

Fourth-quarter 2011 net sales were $660 million, a decrease of $345 million from the third quarter of 2011, primarily due to the timing of revenue recognition in the systems business and lower volume for module-only sales, First Solar said in its announcement. Relative to the fourth quarter of 2010, quarterly net sales increased $50 million from $610 million. Net sales for 2011 were $2.8 billion, up about 8% from fiscal year 2010.

Fourth-quarter net loss per fully diluted share was $4.78, compared to a net income per fully diluted share of $2.25 in the third quarter of 2011 and $1.80 in the fourth quarter of 2010.

Although the company noted that it achieved several milestones last year – including a module efficiency record, sales of several large projects, and reductions in manufacturing costs – outside conditions inhibited strong performance, according to Mike Ahearn, chairman and interim CEO.

In its 2012 guidance, the company reduced net sales predictions from $3.7-$4.0 billion to $3.5-$3.8 billion and reduced operating cashflow from $0.9-$1.1 billion to $0.8-$0.9 billion.

Analysts at Jefferies & Co. described First Solar's quarter ‘just shy of a kitchen-sink quarter.’ In a research note, the analysts pointed out that the company missed its fourth-quarter targets substantially and took a number of charges.

Perhaps more importantly, this latest round of financial results marks a change in business strategy. First Solar ‘now admits that selling CdTe modules as components is no longer the company strategy, and certainly not profitable,’ the Jefferies analysts wrote.

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