(Reuters) - U.S. solar maker First Solar Inc (FSLR.O) posted a quarterly loss on Tuesday, hit by charges to cut production costs and replace faulty panels, and it trimmed its forecast for 2012 sales, sending its shares 8 percent lower.
The company, the world’s lowest-cost solar panel manufacturer, has suffered as prices for the equipment that turns sunlight into electricity tumbled by 50 percent last year as an oversupply of product flooded the market.
The weak quarterly figures, which also lagged Wall Street forecasts, cast a shadow over the company that many analysts have seen as among the best in the solar industry.
“It was pretty disconcerting,” said Aaron Chew, analyst with Maxim Group in New York. “After today, you have to wonder if (the shares) are going to trade down toward the $20s.”
Shares in the company, which are among those most shorted by bearish investors according to Data Explorers, sunk 8 percent to $33.40 per share in post-market trading.
First Solar was the worst performer in the S&P 500 index in 2011, bottoming out in December near $30.
The fourth-quarter net loss was $413.1 million, or $4.78 per share, compared with net income of $155.9 million, or $1.80 per share, in the year-ago quarter.
Excluding one-time charges, First Solar said earnings per share for the quarter were $1.26, missing analysts’ average forecast of $1.53, according to Thomson Reuters I/B/E/S.
One-time charges in the quarter came in above $600 million, including $393 million in goodwill writedowns, largely related to the company’s acquisitions of Optisolar and NextLight in 2009 and 2010, and another $60 million to implement costs cuts.
But most worrying, Chew said, was a $125 million charge to fix panels manufactured between June 2008 and June 2009 that were not operating properly.
That problem was likely known long ago, he said, but the company had not alerted investors to any issues with the panels.
Like competitors Suntech Power Holdings STP.N and Trina Solar Ltd TSL.N, First Solar has sought to reduce its production costs to make the renewable power source less reliant on government subsidies that make it competitive with fossil fuel power plants.
In addition to improving the efficiency of its thin-film solar panels, First Solar said it was reducing its production to between 60-70 percent of capacity, down from the 80 percent level it had said in December it was targeting.
That would cut its 2012 production to 1.5 - 1.8 gigawatts, down from nearly 2 GW in 2011.
And while that prompted the company to trim its sales forecast range by $200 million to between $3.5 billion to $3.8 billion, it said it had not changed its forecast for 2012 earnings of $3.75 to $4.25 per share.
A greater percentage of its sales would be directed to its “systems business,” or its power-plant construction operation which is currently building some of the largest solar power plants in the world.
Sales to distributors or installers, which are less profitable than the systems business, were expected to decline from previous forecasts.
Net sales in the quarter rose 8 percent to $660 million.
Reporting By Matt Daily; editing by Matthew Lewis, Phil Berlowitz