Andrew Ling

First Solar Will Top Estimates Due to Favorable Exchange Rate

Many but not all of their costs are in dollars. Being headquartered in the US much of their employee compensation is in dollars. Also much of the equipment and raw materials expenses are in dollars. The profit margin probably will indeed shrink in the short run before expanding against, since last quarter already met long term operating margin goals way ahead of schedule. Shrinking margins is part of the plan for increasing earnings. You would know that if you listened to the investor's day conference. By slightly shrinking margins into the future they plan on dramatically increasing demand.

Anytime a company in hypergrowth has such enormous margins whether it be Ebay in the 90s or Google today it's only natural for them to increase costs and thereby increase earnings. Ebay, which used to have an amazing 90% profit margin (servers are cheap) but miniscule profits did it through hiring personel and the acquisition of Paypal and Skype.

An analogy I like to use would be if you have a basketball player shooting 60% from the field, you should give him the ball more and let him score more often.