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FIRST SOLAR, INC. (FSLR)

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First Solar Swings To 1Q Loss, Names Hughes CEO

05/03/2012 | 07:24pm US/Eastern

--First Solar posts loss on $401 million of restructuring costs

--Company names James Hughes CEO

--First Solar plans to install 3 gigawatts of solar-power plants worldwide in 2016

By Cassandra Sweet and Nathalie Tadena

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First Solar Inc. (>> First Solar, Inc.) swung to a first-quarter loss on lower revenue and more than $400 million in restructuring costs, although the company named a new chief executive and said better days lie ahead.

First Solar's new chief executive, James Hughes, was first hired in March as chief commercial officer before being promoted to the top job. Hughes was previously chief executive of AEI, a privately held firm that owns interests in power plants in China and Latin America.

First Solar Chairman Mike Ahearn had been serving as interim chief executive since October, when former Chief Executive Rob Gillette abruptly left the company.

Despite the large write-down, First Solar raised its 2012 earnings forecast to $4 to $4.50 a share, from its prior view of $3.75 to $4.25 a share.

Shares of First Solar were recently down 0.4% at $17.99 in after-hours trade Thursday.

First Solar and its rivals have seen their profits and stock prices plunge as a global oversupply of solar panels and soft demand have sent prices tumbling. The market turmoil has driven several solar companies to file for bankruptcy, among them Solyndra LLC, which received more than $500 million in government funding.

First Solar said last month it would cut 2,000 jobs, or about 30% of its global workforce, and close its solar-panel factory near Berlin this fall as part of a restructuring. The company is also idling some of its manufacturing operations in Malaysia and said it has abandoned plans to open a factory in Vietnam. Those and other restructuring activities cost the company $401.1 million in the first quarter, erasing the 15.4% gross profit margin the company eked out in the quarter and dwarfing the previous quarter's $60.4 million in restructuring costs.

First Solar, of Tempe, Ariz., expects solar-panel production at its factories this year to total 1.4 gigawatts to 1.7 gigawatts, down from 2.4 gigawatts in 2011.

In the short term, the company is focused on completing construction of 2.7 gigawatts of solar-power plants that it has sold to NRG Energy Inc. (NRG), Berkshire Hathaway Inc.'s (BRKA) MidAmerican Energy Holdings Co. unit, Exelon Corp. (>> Exelon Corporation) and other companies. For the longer term, First Solar is looking to develop and sell new solar-power plants in countries that have a good amount of sunlight, with plans to sell 3 gigawatts of solar farms in 2016.

Company executives declined to provide details on where those projects would be located, but said First Solar is actively working on potential deals in China, India, Brazil, Peru, Chile, Central America, the Caribbean, Australia and South Africa.

"These are all markets in which we are active today and which we see long-term potential," Hughes said during a conference call with analysts.

First Solar is focused on building large solar farms, rather than smaller rooftop solar systems. Ahearn said the rooftop solar market is overly reliant on government subsidies.

"We're no longer devoting efforts to developing demand in traditional subsidy markets, including rooftop applications, simply because we do not believe these markets offer prospects for sustainable growth," Ahearn said during the conference call.

To compete better against conventional power plants, First Solar aims to cut manufacturing and development costs, increase the rate at which its panels convert sunlight into electricity, and improve power controls at its power plants so that they provide voltage support to the power grids to which they connect, rather than create a drag on grids, Ahearn said.

For the latest quarter, First Solar reported a loss of $449.4 million, or $5.20 a share, compared with a profit of $116 million, or $1.33 a share, a year earlier. Excluding the restructuring costs and other expenses, the latest quarter's loss was 8 cents a share.

Net sales were down 12% to $497.1 million, primarily due to lower average selling prices and lower volumes for sales of panels not related to the company's projects.

Analysts polled by Thomson Reuters had expected a profit of 59 cents a share and revenue of $682 million.

Shares closed at $18.07 Thursday and were halted after hours. The stock is down 87% over the past 12 months.

-By Cassandra Sweet and Nathalie Tadena, Dow Jones Newswires; 212-416-3287; nathalie.tadena@dowjones.com

Stocks mentioned in the article : First Solar, Inc., Exelon Corporation
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