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Earning Recap: Major Solars in Q3 2009

|Includes: First Solar, Inc. (FSLR), SPWR

In Q2, pretty much every solar panel manufacturers reported surprisingly better than expected results because increased demand outweighs the decreased ASP's impact on major players' top line and bottom line. Comparing with that situation, results in Q3 is mixed, ASP is still in downtrend, demand still exceeded supply, however, from trading perspective, even though major players' actuals beated wall street expectations, market sentiment has become much more volatile than Q2, stock prices were beaten nontheless after earning beats.

There are yet more to the rich solar story, polysilicon panels is gradually taking away the cost advantages of thin film panels, indicated by First Solar (NASDAQ:FSLR)'s dropping gross margin by ~6% over the quarter due to the company's reaction to fierce price competition put up by its polysilicon panel competitors.

Looking forward, rapid ASP reduction is still expected until year end 2009, as SunPower (SPWRA) expected ASP to drop another 10% in Q4, demand will keep going up as a result of dropping ASP makes solar energy more affordable. These two forces will continue to have opposite yet strong impact on the earning power of all players in solar industry.