Chinese solar makers Suntech Power Holdings Co. Ltd. (NYSE: STP) and Trina Solar Ltd. (NYSE: TSL) both announced results for their first quarters. Suntech managed to beat revenue expectations, posting sales of $409.5 million versus a consensus estimate of $406 million. But the total reflects a decline of -34.9% sequentially and 53.3% year-over-year. The company posted an EPS loss of -$0.74 compared with an estimate of -$0.50. Gross margins fell to just 0.6%, down from 9.9% in the fourth quarter of 2011 and 20.8% in the same period a year ago.

Trina did even more poorly. Revenues totaled $350 million versus a consensus estimate of $398.5 million and the loss per ADR totaled -$0.42 compared with an estimated loss of -$0.29. Gross margins came in at 13.3%, but the company’s operating margin fell to -11.4%, somewhat better than the operating margin of -14.4% in the fourth quarter of 2011.

Profits and margins for both companies include reserves taken to pay the anti-dumping duties recently approved the US Department of Commerce.

Of the solar makers, only Renesola Ltd. (NYSE: SOL) put up solid enough numbers for the first quarter to enjoy any kind of bump in share price. First Solar Inc. (NASDAQ: FSLR) posted a surprise EPS loss for the first quarter and SunPower Corp. (NASDAQ: SPWR) missed on revenues while coming in slightly ahead of EPS estimates. Chinese solar maker LDK Solar Co. Ltd. (NYSE: LDK) posted horrible results in its fourth quarter and expected results for the first quarter don’t look good either. Neither do estimates for JA Solar Holdings Co. Ltd. (NASDAQ: JASO) or Yingli Green Energy Holding Co. Ltd. (NYSE: YGE).

Suntech said it expects shipments to increase by 20% in the second quarter and gross margins to improve to 3%-6%. The company maintained its full-year shipment guidance of 2,100-2,500 megawatts.

Trina forecast shipment growth of about 31%-37% in the second quarter and gross margins of around 10%. For the full year the company expects to ship 2,000-2,100 megawatts.

Shares of Suntech have fallen about -2.5% by early afternoon today to $1.93 in a 52-week range of $1.70-$8.50. Trina’s shares are up 0.75% at $5.37 in a 52-week range of $5.20-$23.64.

Paul Ausick

Commerce preliminarily determined that Chinese producers/exporters sold solar cells in the United States at dumping margins ranging from 31.14 percent to 249.96 percent.

By ITA’s definition, “dumping occurs when a foreign company sells a product in the United States at less than fair value.”

Two Chinese companies, Suntech Power Holdings Co. Ltd. (NYSE: STP) and Trina Solar Ltd. (NYSE: TSL), will have to pay “dumping margins” (tariffs) of 31.22% and 31.14%, respectively. An additional 59 companies and subsidiaries, including Canadian Solar Inc. (NASDAQ: CSIQ, Hanwha Solarone Co. Ltd. (NASDAQ: HSOL), Yingli Green Energy Holding Co. Ltd. (NYSE: YGE), LDK Solar Co. Ltd. (NYSE: LDK), Jinkosolar Holding Co. Ltd. (NYSE: JKS), and JA Solar Holdings Co. Ltd. (NASDAQ: JASO), will pay dumping margins of 31.18%.

The government of China has already rejected the findings, and the Associated Press reports that a Commerce Ministry official said, “The U.S. ruling is unfair, and the Chinese side expresses its extreme dissatisfaction.”

In reality, the Chinese got off easy. The dumping margins are set at the absolutely lowest end of the scale. In March the Commerce Department hit the Chinese makers with tariffs of less than 5%, far below the 100% tariff demanded by SolarWorld and its co-complainants.

The Commerce Department even left the Chinese makers a way out:

Modules, laminates, and panels produced in a third-country from cells produced in the PRC are covered by this investigation; however, modules, laminates, and panels produced in the PRC from cells produced in a third-country are not covered by this investigation.

So China can move its solar cell manufacturing to Thailand or the Philippines or Vietnam, re-import the parts to China for final assembly, and sell the finished goods in the US without penalty, and presumably at whatever price the manufacturers want.

The largest part of the US solar industry is also likely to be dissatisfied by the preliminary ruling. Companies like Real Goods Solar Inc. (NASDAQ: RSOL) and SolarCity — which has filed for an IPO — have been able to turn low prices for solar panels into a healthy installation business. US solar makers First Solar Inc. (NASDAQ: FSLR), SunPower Corp. (NASDAQ: SPWR), and MEMC Electronic Materials Inc. (NYSE: WFR) all own their own project management and installation businesses as well.

Yesterday’s ruling by the ITA is a not much more than a loss of face to China’s makers, while it could be a real job-killer in the US. Anyone who believes that manufacturing solar cells and modules in the US will become a massive industry probably also believes in the Easter Bunny.

A final ruling on the case is not due until November, and appeals are possible — and likely — fairly quickly.

The ITA’s preliminary ruling is available here.

Most Chinese solar stocks are trading higher in the pre-market this morning. That should tell you all you need to know about this ruling.

Paul Ausick

First Solar Inc. (NASDAQ: FSLR) has been a total disaster, but short covering and bottom-fishing traders are snapping up shares.  After an all-time low of $13.75 this week, shares recovered to $14.92 on Thursday on the most active volume in two weeks (over 10 million shares).  Shares are indicated above $15.00 for Friday but we will see if this can hold. SunPower Corporation (NASDAQ: SPWR) recovered more than 10% on Thursday after a recent low of $4.94 with a close of $5.59 on over 4 million shares (most since Feb 17 at 7.3 million shares).

One potential problem to consider is that the tariffs could inadvertently impact some of the U.S. producers of solar panels as well.  The issue is that many components involved in making these PV panels also come from China.

Suntech Power Holdings Co. Ltd. (NYSE: STP) is a loser in this tariff effort.  Shares were at $2.60 just last Friday and the ADRs closed down at $2.13 on Thursday.  Shares are indicated higher on Friday but we will have to see how it pans out.  Trina Solar Limited (NYSE: TSL) is another loser with its ADR closing at $6.08 Thursday after having been at $7.50 just last Friday.

LDK Solar Co., Ltd. (NYSE: LDK) closed lower on Thursday at $2.91, but this is actually in-line with prices just last Friday and its 52-week range is $2.54 to $7.90.

GT Advanced Technologies Inc. (NASDAQ: GTAT) is often lost in the shuffle as it is on the technology side of the solar PV process.  It is also in LED technology.  Shares closed down at $4.49 on Thursday against a 52-week low of $4.24.  The 12 million shares traded on Thursday was the highest trading volume seen since last August.

If you really want to know what the trend is on a global-solar basis, just follow the Guggenheim Solar (AMEX: TAN).  This ETF closed down yet again at $18.35 on Thursday after closing at $19.21 the prior day and against a $20.61 close last Friday.

Unfortunately, the solar sector has its share of woes and pain.  Austerity, expiration of tax credits, a lack of cost-effectiveness, and other issues are going to be present for the time being whether tariffs exist or not.

JON C. OGG

When the company reported fourth quarter earnings in March, it set expectations for the first quarter fairly low: shipments of 400-420 megawatts of modules and wafers and revenues of $180-$190 million. Now it might be that Renesola was managing expectations, but based on today’s results and the fourth quarter’s report, the company appears to have won its first battle with managing costs. That solution has so far eluded First Solar Inc. (NASDAQ: FSLR), SunPower Corp. (NASDAQ: SPWR), LDK Solar Co. Ltd. (NYSE: LDK), Suntech Power Holdings Co. Ltd. (NYSE: STP), Yingli Green Energy Holding Co. Ltd. (NYSE: YGE), and JA Solar Holdings Co. Ltd. (NASDAQ: JASO). Jinkosolar Holding Co. Ltd. (NYSE: JKS) is scheduled to report earnings later today and analysts expect an EPS loss of -$1.07 on revenue of just $158.9 million, about half the revenue of a year ago.

In March, Renesola’s CEO said this about his company’s cost structure:

Although we achieved our year-end cost-reduction targets, which placed our cost structure among the lowest in the industry, it was not enough to offset extremely low solar wafer and module prices.

In the first quarter the company’s module manufacturing cost fell to $0.74/watt and Renesola expects to lower that to $0.70/watt in the second quarter. Half the cost savings will come from lower wafer costs and the rest from lower pricing for polysilicon. The company is vertically integrated and makes its own wafers and polysilicon, which helps keep its costs down.

For the first quarter Renesola had positive gross margin of 9% on its solar modules while its overall gross margin was negative, -3.8%. That’s not good, but it’s a lot better than the negative gross margin of -28.1% the company posted in the fourth quarter. In the first quarter of 2011 gross margin rang in at 21%. Those were the days.

Shares in Renesola are up nearly 12% in pre-market trading, at $2.00, in a 52-week range of $1.45-$8.83.

Paul Ausick

Westinghouse Solar is a designer and manufacturer of integrated rooftop solar power systems, and CBD is an Australian diversified renewable energy company.  Margaret Randazzo is currently the CFO of Westinghouse Solar and she was also appointed Interim CEO as former CEO Barry Cinnamon is leaving the company.  CBD anticipates that it will shift to a U.S. listing upon the closing of the merger and it plans to list its common shares on that NASDAQ.

The press release noted that the initial meetings about a merger took place in December of 2011.  It is now May and we cannot help but to wonder whether or not other solar companies have considered mergers.  Here are two of the easy observations in the broader solar sector:

First Solar, Inc. (NASDAQ: FSLR) is now at all-time lows and has remained profitable so far despite shares being down 90% from last year’s highs.  It is now only worth about $1.4 billion and it would be considered a busted IPO if the move happened faster.

SunPower Corporation (NASDAQ: SPWR) is already majority-owned by Total SA (NYSE: TOT) and it trades at about 75% under where Total took its stake of almost $1.4 billion.  The entire market cap including the majority stake held by Total is only $628 million.

LDK Solar Co., Ltd. (NYSE: LDK) is in China and now only worth $360 million.  There have been takeover rumors before in this name but the China base and woes in China right now probably make it difficult for a non-Chinese player to acquire the company.

MEMC Electronic Materials Inc. (NYSE: WFR) is a name which used to come up regularly in the takeover rumor category, although it has been so battered that getting approval might be impossible after 95% losses from the peak.  It is now worth only about $764 million in market cap.

We would note that Energy Conversion Devices was also always a ‘merger rumor name’ in solar but it went bankrupt.  There is no assurance that other solar mergers are on the horizon, but these companies might want to start thinking about stock mergers which could still give holders upside if the combined companies turn around and thrive again.

To show just how bad things are, the Guggenheim Solar (AMEX: TAN) ETF trades at $21.09 and it has lost one-third of its value since its reverse split.

Westinghouse shares closed at $0.40 and its 52-week trading range is $0.26 to $2.75.  The market value was only $6.66 million as of Tuesday’s close.

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JON C. OGG

Two of China’s five large solar PV makers will report quarterly results later this month. Trina Solar Ltd. (NYSE: TSL) reports on May 17th and is expected to post an EPS loss of $0.29 on revenues of $396.3 million, a revenue decline of about -28% compared with the same period last year. Yingli Green Energy Holding Co. Ltd. (NYSE: YGE) reports on May 15th and the consensus estimates call for an EPS loss of -$0.21 on revenue of $448.8 million, a drop of nearly -15% in revenues year-over-year.

LDK Solar Co. Ltd. (NYSE: LDK) won’t report first quarter earnings until later, but it posted a huge EPS loss of -$4.63 in the fourth quarter and is expected to show an EPS loss of -$0.88 on revenue of $265.4 million, a revenue drop of more than -65% year-over-year. Suntech Power Holdings Co. Ltd. (NYSE: STP) also reports late, but its fourth quarter EPS loss totaled -$0.76 and first quarter estimates call for an EPS loss of -$0.50 on revenue of $410.9 million, a -53% dive in sales. JA Solar Holdings Co. Ltd. (NASDAQ: JASO) reports later as well, following a fourth quarter loss of -$0.11 and estimates for another EPS loss of -$0.15 on revenues of $234.7 million, a revenue decline of more than -57%.

First Solar’s quarterly sales of $497 million were $163 million lower sequentially and $70 million lower than the same period a year ago. The adjusted EPS loss for the quarter was -$0.08, and the GAAP loss was a whopping -$5.20/share, some $4.64 of which went to cover restructuring charges and another $0.48 covered excess warranty expenses. Analysts had consensus estimates for EPS of $0.59 on revenue of $681.5 million.

SunPower’s quarterly revenues came in light as well, at $494.1 million versus an estimate of $525.4 million. The adjusted EPS loss of -$0.12 was better than the estimated loss of -$0.15.

The dismal report notwithstanding, First Solar raised its full-year adjusted EPS guidance from $3.75-$4.25 to $4.00-$4.50, compared with a consensus estimate of $4.07. The company also anticipates an increase in its operating cash flow, from $800-$900 million to a new range of $850-$950 million.

SunPower said next quarter’s EPS loss would range from -$0.20 to -$0.05, compared with a consensus estimate of -$0.05. The second quarter revenue estimate was unchanged at $575-$650 million versus a consensus estimate of $638.9 million.

First Solar and SunPower are both restructuring (shrinking) as fast as they can with an eye toward lowering costs to a level at which the companies can again make a profit. The catch is that their Chinese competitors are doing the same thing, and in this race to the bottom there can never be a real winner. Any companies left standing will be staggering badly.

First Solar’s shares are down more than -5.5% today at $17.05 after posting a new 52-week low of $16.93 earlier. The previous range was $17.50-$142.22. SunPower’s shares are down about -1.8% at $5.60 in a 52-week range of $4.94-$23.36.

The Chinese companies are mixed, with Yingli up about 3% and JA Solar down about -3% with the others spread around in between.

Paul Ausick

The unofficial closing bells put the DJIA down nearly 15 points to 13,213.63 (-0.11%), the NASDAQ fell nearly 23 points (-0.74%) to 3,046.36, and the S&P 500 fell -0.39% or more than 5 points to 1,397.91.

There were several analyst upgrades and downgrades today, including Demand Media Inc. (NYSE: DMD) cut to ‘equal weight’ at Evercore; TransCanada Corp. (NYSE: TRP) cut to ‘hold’ at Desjardins; American Railcar Industries Inc. (NASDAQ: ARII) raised to ‘neutral’ at UBS; Chesapeake Energy Corp. (NYSE: CHK) raised to ‘outperform’ at BMO Capital; Kraft Foods Inc. (NYSE: KFT) raised to ‘overweight’ at JPMorgan; Dollar General Corp. (NYSE: DG) raised to ‘strong buy’ at Raymond James; and Kaiser Aluminum Corp. (NASDAQ: KALU) raised to ‘buy’ at Dahlman Rose.

Earnings reports since markets closed last Friday have led to some price changes as of the last half hour of trading today: LDK Solar Co. Ltd. (NYSE: LDK) is up 10.8% at $3.28 (our coverage here); Humana Inc. (NYSE: HUM) is down -8.4% at $80.49; Senior Housing Properties Trust (NYSE: SNH) is up 0.32% at $22.09; and Sohu.com Inc. (NASDAQ: SOHU) is down -7.4% at $51.62.

Tomorrow we get earnings from Arch Coal Inc. (NYSE: ACI), Archer Daniels Midland Co. (NYSE: ADM), Bankrate Inc. (NASDAQ: RATE), Broadcom Corp. (NASDAQ: BRCM), Chesapeake Energy Corp., Domino’s Pizza Inc. (NYSE: DPZ); Office Depot Inc. (NYSE: ODP); Pfizer Inc. (NYSE: PFE); Sirius XM Radio Inc. (NASDAQ: SIRI); and Valero Energy Corp. (NYSE: VLO).

Other standouts from today include the following stocks:

Barnes & Noble Inc. (NYSE: BKS) is up about 54% at $21.07 after posting a new 52-week high of $26.00 earlier today. The company has created a joint venture with Microsoft Corp. (NASDAQ: MSFT). More coverage here.

Sunoco Inc. (NYSE: SUN) is up 19.5% at $48.89 after posting a new 52-week high of $49.50 earlier today. The company is merging with Energy Transfer Partners L.P. in a deal worth about $5.3 billion. More coverage here.

VeriFone Systems Inc. (NYSE: PAY) is down -12.7% at $47.52. The company’s stock was downgraded at Deutsche Bank, along with comments that the company was inflating its organic growth estimates.

Stay tuned for Tuesday. Richmond Fed President Jeffrey Lacker, Minneapolis Fed President Naryana Kocherlakota, San Francisco Fed President John Williams, and Philadelphia Fed President Charles Plosser are all giving speeches. Motor vehicle sales are expected to be reported throughout the day. We have noted the following events on the schedule (all times Eastern):

• 10:00 a.m. – Institute for Supply Management manufacturing index
• 10:00 a.m. – Construction spending
• 11:30 a.m. – 4- and 52-week bill auctions

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Paul Ausick

No such luck. For the quarter the company reported a loss per diluted ADS of -$4.63 compared with a consensus estimate for a loss of -$0.85. Revenue for the quarter came in at $420.2 million versus an estimate of $431.6 million. Gross margins were not only negative, they were abysmal — -65.5%. In the same period a year ago, gross margins were 27.3%.

Other solar makers like First Solar Inc. (NASDAQ: FSLR) had rotten fourth quarter results, but nothing like this. First Solar is expected to post EPS of $0.59/share in the first quarter, after delivering EPS of $1.26 in the fourth quarter, a big miss on expectations. Trina Solar Ltd. (NYSE: TSL) is expected to recover a bit in the first quarter, with an EPS loss of $0.29 compared with a loss of $0.93 in the fourth quarter. Suntech Power Holdings Co. Ltd. (NYSE: STP) is expected to post an EPS loss of $0.50 in the first quarter, better than the company’s loss of -$0.76 in the fourth quarter. JA Solar Holdings Co. Ltd. (NASDAQ: JASO) put up a loss of -$0.11 in the fourth quarter and is expected to post an EPS loss of -$0.15 in the first quarter. Yingli Green Energy Holding Co. Ltd. (NYSE: YGE) put up a loss of -$0.38 last quarter and is expected to improve to a loss of -$0.21 this quarter.

More than half of LDK’s quarterly loss was due to writedowns:

During the preparation of its fourth quarter 2011 financial results, LDK Solar’s management determined that an inventory write-down and provision for firm purchase commitment of $232.6 million was required as a result of the significant drop in market price for polysilicon, wafers and modules during the fourth quarter. As a result, gross margin and results from operations were negatively impacted in the fourth quarter of fiscal 2011.

The total loss for the quarter amounted to $531.4 million. LDK is not particularly optimistic either:

In 2012, we expect that excess capacity and further policy uncertainties in Europe and the U.S. will result in continued intense competition within the solar industry.

The company forecasts revenue of $2.0-$2.7 billion, with a prior consensus estimate of $2.19 million. The expected ADS loss in 2012 is $1.37, but that is almost sure to drop after today.

The question for LDK and the other Chinese solar maker is whether or not the government will ride to their rescue. In late 2010, the government made more than $25 billion in loans available to its solar makers so that the companies could expand production. That idea didn’t work out too well, so now the country and the country’s solar industry must go to Plan B. And that has to include consolidation and picking winners. LDK is probably not on the list.

LDK’s shares are down just over -1% in the pre-market at $2.93 in a 52-week range of $2.55-$11.73.

Paul Ausick

First Solar, Inc. (NASDAQ: FSLR) would now effectively be considered a broken IPO if this price was retroacted back to its IPO price.  Maxim is late on its call with a SELL rating, but all you have to do is look at the objective price target to guess why this is so bad: it is calling for $9 per share and it leaves room for it to go lower.  Today marks an ALL-TIME LOW!!!!!

LDK Solar Co., Ltd. (NYSE: LDK) is one you have to ‘love’ when it is likely one of the Chinese solar panel dumpers in America and elsewhere.  Its ADRs are down 9.6% late-day at $2.94 on above-average volume.  The 52-week low here is $2.55.

Suntech Power Holdings Co. Ltd. (NYSE: STP) is in the same LDK boat today with a 7% drop on light volume to $2.43 against a 52-week low of $1.70.

SunPower Corporation (NASDAQ: SPWR) is down 2.6% more at $5.36 and its 52-week low is $4.94.  Total probably either better think of how to cover its tracks here for that $1 billion (and then some) majority stake acquisition.  It either better write down its value or it better consider buying the rest at about half-price.

With the losses realized in the alternative energy sector investments (not including valuation write-downs) this is a sad but fair question to ask… Can the world afford Earth Day?

Part of the issue is not just dumping.  It is austerity measures.  Governments have supported alternative energy endlessly.  That trend has started to come to an end and ultimately this sector is going to have to learn to survive and thrive without subsidies And without government loan guarantees.  It is a bad spot to be in when you rely on government hand-outs to survive when governments can no longer afford to keep handing that money out.

JON C. OGG

A report from Reuters cites one analyst as saying that solar makers are essentially conducting going-out-of-business sales. First Solar Inc. (NASDAQ: FSLR), Trina Solar Ltd. (NYSE: TSL), LDK Solar Co. Ltd. (NYSE: LDK), Suntech Power Holdings Co. Ltd. (NYSE: STP), and Hanwha SolarOne Co. Ltd. (NASDAQ: HSOL) are among the hardest hit.

Share prices are tumbling again today. First Solar is down about -4.2% at $21.07 in a 52-week range of $20.01-$145.16. Trina is down about -1% at $6.64 in a 52-week range of $5.28-$30.10. LDK is down -5.4% at $3.17 in a 52-week range of $2.55-$11.63. Suntech is down -3.2% at $2.71 in a 52-week range of $1.70-$9.50, and Hanwha SolarOne is down -4.7% at $1.21 in a 52-week range of $0.91-$7.05.

Paul Ausick