Solar-panel maker First Solar (FSLR) posted a loss $0.08 per share in the first quarter of 2012 on sales that slumped 12%, to $497 million. The company also appointed James Hughes, former Chief Commercial Officer, to CEO, replacing Chairman Mike Ahearn, who had been serving as the interim CEO since Robert Gillette resigned last October.
Surprisingly, the company raised its profit outlook, citing a stronger project backlog and plans to lay off around 30% of its workforce. Management also announced that it has lowered its production costs to about $0.69 per watt, suggesting that the company may still yet become the low-cost producer in the industry. Further, it’s becoming more likely that the European elections may swing against austerity movements, and more towards the center-left, which we think could spur government spending. Since the center-left tends to be more environmentally conscious, the solar industry could find some support in coming periods.
However, until we see more concrete developments in the political climate, we’re still far from excited about the company – we first started warning subscribers of the firm’s impending massive stock-price decline in September of last year and reiterated our view a number of months ago (click here). The company’s multiple has been thoroughly depressed since that time, and we’re still waiting for the shares to fall even further before becoming more constructive on the firm’s risk/reward profile.