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Energy

First Solar Mixed Guidance, Great Reception (FSLR)

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By Douglas A. McIntyre Updated Published
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First Solar Inc. (NASDAQ: FSLR) has laid out its 2010 financial guidance, and it announced plans to add eight production lines at its manufacturing center in Kulim, Malaysia starting production in first half of 2011.   The company gave 2010 sales of $2.7 billion to $2.9 billion, on earnings of $6.05 to $6.85 EPS. Thomson Reuters has estimates pegged at $6.55 EPS and $2.4 billion in revenues, which compares to 2009 estimates of $7.32 EPS and $2.00 billion in revenues.  This guidance can be argued both ways because higher sales and in-line revenues means lower-than-expected margins, but traders are receiving it with open arms so far.

The solar leader also plans to invest $365 million of capital to add two production plants with four manufacturing lines each, which should increase annual capacity by 424 megawatts based upon the third quarter’s annual run rate of 53 MW.

Also noted was that free cash flow targets would be set between $180 and $290 million with operating cash flow targets of $730 to $790 million.  Consolidated gross margins are expected to be 38% with operating margins at 23-24%, influenced by a mix shift to the systems business, which includes $0.6-0.8 billion of EPC/project development.

Shares are trading up on this sales news even if the guidance on earnings is not as solid.  Also, keep in mind that this came on top of reports that First Solar’s 55 MW project was dropped by a Los Angeles utility.  The stock closed down 1.6% at $136.74 on the day, yet shares are higher at $143.75 in the after-hours session.  Margin compression is something analysts and investors alike have started growing accustomed to in solar stocks.

JON C. OGG

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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