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NEW YORK — First Solar, the nation's largest solar panel maker, said Thursday its second-quarter profit more than doubled on strong sales of its thin-film modules.
The results beat Wall Street expectations, but investors were turned off by a rebate program that would hurt company earnings in the second half of the year. First Solar stock gave up $7.67 a share, or 4.4 percent to $165.88 in after-hours trading.
The Tempe, Ariz.-based company reported net income of $180.6 million, or $2.11 per share, in the three months ended June 27. That compares with earnings of $69.7 million, or 85 cents per share, in the same period a year ago.
Quarterly sales reached $525.9 million, almost double the $267 million reported for the same period in 2008.
Analysts surveyed by Thomson Reuters expected earnings of $1.62 a share on revenue of $459.1 million.
In February, First Solar Chairman and CEO Michael J. Ahearn Ahearn warned that the meltdown in the banking industry put some of its customers under financial stress, sapping their ability to pay for solar.
But the economy has since become "generally more favorable" for solar manufacturers, he said.
First Solar Inc., the largest solar company by market capitalization, has dropped its manufacturing costs by 6 cents to 87 cents per watt in the second quarter. It also boosted production as it completed a new manufacturing facility in Malaysia.
Ahearn said First Solar will push its solar panels heavily in Germany, which has some of the most generous incentives for alternative energy. The company will offer rebates for its thin-film modules that are tied to its competitor's polysilicon solar modules, guaranteeing that First Solar's modules come at a discount.
"We'll do what we can to defend our position in these core markets," Ahearn said.
Company officials estimate that the rebate program would cost between $40 million and $60 million in the second half of the year. As soon as they announced it, First Solar shares started to fall in after-hours trading.
Mark Bachman, an analyst with Pacific Crest Securities, said a solar company has never offered a rebate like this. While it shows innovation during a tough economy, it also worries investors.
"People have never seen it before and they don't know how to value it," he said.
The company announced during the past few months that it had signed agreements with Pfalzsolar in Germany and Borvis Lend Lease in Australia to provide solar modules for a variety of projects.
First Solar also announced this month it would build and operate what's expected to be France's largest solar panel manufacturing plant.
