* Maintains revenue, margin forecasts for full year
* CEO takes steps to reduce manufacturing cost (Adds details from conference call, Q3 outlook, byline)
LOS ANGELES, Aug 9 (Reuters) - SunPower Corp SPWRA.O on Tuesday lowered its 2011 profit outlook but backed its revenue and gross margin forecasts, saying demand for solar panels is strong after a tumultuous first half of the year.
The U.S. panel maker, which also reported an expected net loss for the second quarter, is majority-owned by French energy giant Total (TOTF.PA) following a tender offer that closed in June.
Like the rest of the solar industry, SunPower was hit hard when No. 2 solar market Italy pared its generous incentives for the power source. The cuts slowed development of projects in Italy and sent prices on solar products into a tailspin.
In recent weeks, solar power companies including JA Solar Holdings Co Ltd (JASO.O), Trina Solar (TSL.N), MEMC Electronic Materials Inc WFR.N and First Solar Inc (FSLR.O) have warned that the industry's rapid price declines hurt profits.
To combat the weakness, SunPower has shifted sales in Italy toward less profitable residential and commercial systems, where demand is greater, and away from utility-scale projects.
SunPower's solar panels are the most efficient in the industry at transforming sunlight into electricity, and therefore its products command a price premium of between 20 and 40 percent. But the San Jose, California company has faced criticism that its costs are too high compared with its low-cost Chinese peers.
"The company still has a pretty uncompetitive cost structure," said Morningstar analyst Stephen Simko. "The company is still scuffling, and I still worry about their costs. ... I'd still be worried about the stock and its near-term prospects."
SunPower executives addressed those concerns on Tuesday by laying out a plan to speed up its cost reduction program.
"Our technology has significant cost reduction potential," Werner said on a conference call with analysts. To help cut costs, the company later this year will begin reducing the number of steps it takes in solar cell manufacturing.
SunPower expects to reduce such steps by 15 percent by the end of 2012, Werner said, six months ahead of schedule.
In addition, SunPower said it had reduced its price premium by about 5 to 10 percent in some competitive markets, particularly Germany.
AMERICAN MARKET IN FOCUS
For the quarter, SunPower reported a net loss of $147.9 million, or $1.51 per share, on revenue of $592.3 million. It warned of the loss last month. [ID:nN1E76O1PL]
SunPower forecast a 2011 profit, before one-time items, of 75 cents per share to $1.25 per share, down from an earlier forecast of $1.20 per share to $1.70 per share.
In an interview, Werner said a higher percentage of sales to North America would weigh on the bottom line because of the higher tax rate.
The company's 2011 revenue forecast of $2.8 billion to $2.95 billion and non-GAAP gross margin view of 17 percent to 19 percent was unchanged.
SunPower and other solar companies have been increasing their focus on the U.S. market as government incentives in the world's biggest solar markets, Germany and Italy, decline.
Last week, SunPower said it would build a factory in Mexicali, Mexico to help meet growing North American demand.
Also, earlier on Tuesday SunPower and First Solar reached agreements with environmental groups the Sierra Club, Defenders of Wildlife and the Center for Biological Diversity to help protect endangered animal species around two of the largest planned solar power plants in the United States.
As a result of the deal, construction is expected to begin on SunPower's 250-megawatt California Valley Solar Ranch in San Luis Obispo county "in weeks or single digit months," Werner said in an interview. The company is still awaiting the closing of a loan guarantee from the U.S. Department of Energy.
SunPower shares closed at $16.24 on the Nasdaq, up 4.7 percent on the day. (Reporting by Nichola Groom. Editing by Robert MacMillan, Bernard Orr)