First Solar shares hammered on outlook

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 Feb. 26, 2013, 6:45 p.m. EST 

 http://www.marketwatch.com/story/first-solar-shares-hammered-on-outlook-2013-02-26?siteid=bigcharts&dist=bigcharts

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By Matt Andrejczak, MarketWatch

SAN FRANCISCO (MarketWatch) — First Solar’s ongoing business transformation has hit a nasty speed bump, prompting the company on Tuesday to issue a weak sales and cash flow outlook for the first quarter.

The stock FSLR -14.09%  , on a tear over the past six months, tumbled 10% to $28.35 in after-hours trade following a broad sell off in solar stocks during the regular session. Read after a brilliant run, solar stocks drubbed.

First Solar, which in December 2011 changed its business model to focus on developing solar farms for utility providers, blamed competitive pricing and the loss of a project in India for its softer-than-expected outlook.

First Solar

Solar panel construction.

The company said it expects sales of $650 million to $750 million for the first quarter, below the $822 million consensus forecast of analysts surveyed by FactSet. First Solar pegged cash flow from operations at breakeven to up to $100 million. Analysts were estimating $214 million.

Meanwhile, First Solar projected a wide first-quarter profit range: between 70 cents and 90 cents a share. Consensus is at 88 cents.

Under its new model, First Solar earns revenue from providing construction services, selling its photovoltaic solar panels to power the plant, and in some cases, serving as the plant’s maintenance manager once it’s up and running.

First Solar has nine projects sold and under construction in California, Arizona as well as Canada and Dubai. Buyers include MidAmerican Energy Holdings, NextEra NEE -0.86%  and Exelon EXC -0.28%  , according to a slide that accompanied First Solar’s earnings presentation. 

First Solar intends to issue its full-year outlook along with its targets through 2015 when it holds an analyst day April 6.

Heading into Tuesday’s report, analysts were estimating First Solar would earn $4.10 a share in 2013 on $3.58 billion in revenue. Operating cash flow was seen at $774 million.

Unless First Solar can win more business, those targets will likely be hard to meet.

Matt Andrejczak is a reporter for MarketWatch in San Francisco. Follow him on Twitter @MarketWatchMatt.