First Solar (NASDAQ: FSLR ) is taking a beating today, its stock off almost 20%
thanks to a lowered outlook for 2012, delays in its projects and expensive
reorganization plans. That makes First Solar off an ugly 74% so far in 2011 and
almost 90% from its 2008 peak. First Solar isn't alone, either. Many solar
companies are getting hit hard this year and are running the risk of going dark
permanently. Solar-panel manufacturers face growing questions of viability for a
host of reasons, including: Weak solar demand: Oil prices have once again ticked
up to $100 per barrel, but it remains a very expensive task to install solar
panels. Energy prices just aren't high enough to make the switch worthwhile in
the short term besides, many consumers don't have the extra money, and many
businesses are more concerned with preserving capital and staying defensive than
winning points for reducing carbon emissions. European nations were some of the
biggest buyers of solar panels thanks to rich subsidies and government projects,
but obviously debt concerns have squashed that spending. Rock-bottom solar
prices: The irony is that solar panels are more affordable than ever before
thanks to low-cost producers in China who have not just moved prices lower, but
have saturated the market with too much supply. The result is fire-sale prices
on solar panels just to deal with the abundance of inventories. The Solyndra
debacle: The bankrupt company that received more than $500 million in funding
from the federal government might be a political football in an election year,
but it also is a warning bell for the entire solar industry. More oversight and
the elimination of subsidies could squeeze the struggling industry even more.
All this has added up to an ugly outlook from First Solar, the largest U.S.
solar cell company and one of the top manufacturers in the world. Earlier in
2011, FSLR reduced its revenue guidance to $3.6 billion to $3.7 billion for this
fiscal year. In October, it cut its outlook again to $3 billion to $3.3 billion
in total sales on the year. And today, sales projections were lowered yet again
to $2.8 billion to $2.9 billion for the fiscal year. That's not a good sign.
The challenges at First Solar are shared industry-wide as sales dry up and
profits evaporate. Just look at the flop of other solar stocks in both the U.S.
and China, and you'll see that FSLR is not alone in its troubles. The
Guggenheim Solar (NYSE: TAN ) exchange-traded fund
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