First Solar, Inc. Shares Dive, Deferred Revenue To Blame


First Solar, Inc. (NASDAQ:FSLR) shares tanked 5.5% after-hours on Tuesday after the company posted revenue of $544 million compared to $785.88 million forecasts. Adjusted earnings for the company came in at $0.04 per share. In pre-market trade, shares are down over 5% at $60.30. However, year to date,First Solar shares are up over 14%.

Deferred earnings to blame

Chief Executive Jim Hughes said that the deferred revenue for the second-quarter will not affect the full year profit. Hughes expects full-year earnings in the range of $2.40 to $2.80 per share. The company cited that revenue was weaker than the expected due to delayed recognition of the project from last quarter as well as this quarter. Also, the revenue will be deferred for the second half, as well.

Deferred earnings were the outcome of project delays and also some issues with the inverters at its 550-megawatt Desert Sunlight power plant in Southern California.

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“It manifested itself only when the plant came up to full power,” Chief Financial Officer Mark Widmar said on the call. He added that they are not worried about it, and all it requires is some engineering time.

The company sets up large Solar Farms primarily for utilities and earns revenue at irregular periods. Last year, in the third-quarter the sales of the company almost doubled earning half of the revenue from Desert Sunlight to its balance sheet. Net income for the first- quarter was twice the estimates after adding revenue from its 139-megawatt Campo Verde project in California.

Strong orders pipeline for First Solar

In the second-quarter, First Solar expanded its capacity by adding 800 megawatts of new power plant, including 250 megawatts silver State South and 50 megawatt Macho Springs projects.  There were no details on the terms of these agreements. CEO Hughes said that opportunities in the pipeline has increased, which will transform into orders soon.

Ben kallo, an analyst with Robert W. Baird & Co said that this was one of the best periods for bookings. kallo assigned Buy rating on the shares.

Though the deferred revenue this quarter marred the results, the same could help First Solar to exceed estimates for the current period.

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