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First Solar (NASDAQ:FSLR) Thursday announced disappointing results for the second quarter of 2011:

See the full earnings call transcript

Net sales were $533 million in the quarter, a decrease of $34.5 million from the first quarter of 2011, primarily due to lower average selling prices (ASPs) as solar photovoltaic (PV) policy uncertainties in Italy, Germany and France adversely impacted demand in the second quarter. Quarterly net sales decreased from $588 million in the second quarter of 2010... Second quarter net income per fully diluted share was $0.70, down from $1.33 in the first quarter of 2011 and $1.84 in the second quarter of 2010.

This is the bellwether solar company, so it's important to follow it when thinking about other solar companies like Energy Conversion Devices (NASDAQ:ENER) and Evergreen Solar (ESLR).

First Solar is a ten billion dollar company. Smaller companies will have a harder time being competitive for two reasons: when it comes to the "bankability," or ability to borrow for a PV solar project, lenders are going to prefer a company that will be able to honor the manufacturer warranty. Second, the struggling companies are limited in their ability to invest in research and development, which is essential because the competition is lowering costs every year.

The First Solar guidance is for almost a billion dollars in operating income. If the company wanted to, it could easily buy a number of its competitors. Evergreen Solar secureds are trading at ~35, which values the company at $50 million and change. Energy Conversion Devices bonds essentially value that company at a negative enterprise value.

What does it tell you when a big company isn't even interested in buying two smaller competitors for less than one month's cash flow?

Source: First Solar Reports Lower Revenue, Earnings Due to European Subsidy Setbacks