(Adds analyst comment, background)
By Nichola Groom
LOS ANGELES Aug 6 First Solar Inc on
Tuesday reported quarterly earnings and revenue well short of
expectations and slashed its outlook for the year due to
construction delays for a large project and a decision to sell
two projects only after they are finished.
The company's shares slid 9 percent in extended trade.
First Solar also said it is acquiring the intellectual
property of General Electric Co's cadmium telluride solar
technology and entering into a partnership with the company that
will raise operating costs this year. It will issue 1.75 million
shares to GE as part of the deal, making GE one of First Solar's
10 biggest shareholders.
Finally, the company said it would acquire a 1.5 gigawatt
pipeline of projects in the United States and Mexico from
developer Element Power. Terms were not disclosed.
The company said net income fell 70 percent to $33.6
million, or 37 cents per share, in the second quarter, from $111
million, or $1.27 per share, a year ago.
Excluding items, the company earned 39 cents a share, below
analysts' average estimate of 52 cents a share, according to
Thomson Reuters I/B/E/S.
Revenue fell 46 percent to $520 million. Analysts were
expecting $721.08 million in revenue.
First Solar has been building a string of major
utility-scale solar projects in the western United States. The
230-megawatt Antelope Valley Solar Ranch One project in
California is expected to be completed in the fourth quarter,
but the company said on Tuesday that it had run into delays in
the county approval process for materials used in construction.
In addition, it said it would hold off on selling two other
projects until they are completed, a move that will improve the
projects' economics but delay revenue recognition.
"Revenue recognition can be choppy for a project-centric
company such as this, so the quarterly miss is not all that
shocking," Raymond James analyst Pavel Molchanov said in an
email. "But the guidance cut - less than four months after
giving the guidance at the April analyst day - is highly
damaging to market sentiment."
First Solar and fellow panel manufacturers were Wall Street
darlings before a surge in Chinese production and a reduction in
generous government incentive programs in Europe created a
global glut of solar panels that over the last two years sent
prices into a tailspin and erased profits in the fast-growing
First Solar has cut costs and focused its growth efforts on
overseas markets where solar power does not need incentives to
compete with power from the grid. That strategy, and more stable
pricing for solar panels, has paid off this year for investors.
As of Tuesday's close, First Solar shares had gained more than
50 percent this year.
During the quarter, First Solar raised $427.7 million from a
secondary offering of 9.75 million shares of its common stock.
The Tempe, Arizona company lowered its 2013 sales outlook to
between $3.6 billion and $3.8 billion. It had previously
expected sales of $3.8 billion to $4 billion.
Its earnings per share forecast, excluding the equity
offering and issuance of shares to GE, was lowered to between
$3.75 and $4.25. It had previously expected earnings of $4 to
$4.50 a share.
Including the share sale and issuance, First Solar expects
to earn between $3.50 and $4.00 a share for the year.
First Solar shares fell to $42.55 after closing at $46.75 on
(Additional reporting by Bijoy Koyitty in Bangalore; Editing by
Maju Samuel and Steve Orlofsky)