First Solar (Nasdaq: FSLR), the largestsolarcompany in the world by market capitalization, just announced its financial results for the first quarter of 2011. Net sales were $567 million in the quarter (Street at about $555 million), a decrease of $42.5 million from the fourth quarter of 2010. Quarterly net sales decreased slightly from $568 million in the first quarter of 2010, primarily due to lower ASPs.

First Solar's margins fell amidst falling ASPs, a rarity for the firm. Shares fell 2.1 percent to $134.66 in late trading.

First Solar's updated 2011 guidance:

  • Net sales of $3.7 billion to $3.8 billion (trimmed from an upper bound of $3.9 billion)
  • Operating income of $900 million to $970 million

Last quarter's numbers for 2011

  • 2.0 gigawatts of module production
  • Consensus analyst market forecast of 17.6 gigawatts in 2011 with 2.4 gigawatts in North America
  • 2.9 gigawatts of capacity by end of 2012
  • Expecting to grow efficiency 0.5 percent per year

Module Operations

  • Production 407 megawatts
  • Line run rate continues to improve: annualized capacity per line of 64.1 megawatts
  • A small increase from last quarter: conversion efficiency at 11.7 percent
  • Released an 85-watt module
  • Module manufacturing cost is $0.75 per watt
  • Malaysia 5 at full production and 6 ramping in Q2

Q1 2011 Performance Summary

  • Executing on ~450 megawatts (DC) of planned builds in 2011; flexibility to 600 megawatts
  • Agua Caliente DOE loan commitment and sale to NRG expected to close in late Q2 or early Q3
  • Topaz received final EIR and awaits conditional use permit from SLO county

Managing Through EU Market Uncertainty

  • Channels adversely impacted by actual or contemplated FIT changes in Germany, France and Italy -- resulting in project delays and uncertainties

Developing new markets

  • India pipeline could drive >100 megawatts in 2011
  • Extending into the 10-kilowatt to 30-kilowatt commercial rooftop segment
  • Discussing several utility projects with Chinese generating firms

“Despite European market uncertainties, First Solar has good visibility into our demand for 2011,” said Rob Gillette, the CEO of First Solar.

The firm's margins remain strong and could stay solid even with PPA pricing at $0.10 per kilowatt-hour -- if the company executes on its long-term cost-reduction roadmap.