On Wednesday, First Solar (NASDAQ: FSLR) announced that, in order to protect itself from problems within the solar industry, the company would be cutting back spending, and as a result of this profit forecast was cut as well.
Solar panels, Reuters reports, have fallen 40% this year, a drop that is starting to strain some companies and has pushed others into bankruptcy.
And in the third quarter of 2011, First Solar was not up to par with Wall Street estimates.
So company officials have decided the best way to handle this would be to slow everything down, as Reuters reported.
Mark Bachman, of Avian Securities, told Reuters that he still had a positive outlook on the company:
“Am I afraid of First Solar going out of business? No, I am not.”
As Reuters reports, the company lowered the sales forecast for 2011 from between $3.6 billion and $3.7 billion to between $3.0 billion and $3.3 billion.
And per-share earnings, the article continued, would be between $6.50 and $7.50 rather than $9.00 and $9.50.
But the company is optimistic about how this will affect sales in the future, and the revised forecast has not hurt the company’s value today.
First Solar was up 12.6% on Wednesday morning to $48.76, and a large portion of this may have been related to the management change that occurred on Tuesday.
Rob Gillette, CEO of First Solar, was released from his position at the top of the company.
He has been temporarily replaced by Michael Ahearn, chairman of First Solar, who made the decision for the slowdown in spending to boost the company’s success.
As Alex Morris of Raymond James & Associates told Bloomberg:
“Ahearn allayed market fears that there was some sort of scandal. The guidance cuts are pretty ugly but the shares got hammered yesterday that there was something bigger going on.”
According to Barron’s, the government is investigating First Solar’s use of loan guarantees after Solyndra’s bankruptcy. This switch in management is sure to at least help reduce fear.
That’s all for now,