Are U.S. Solar Companies Losing Market Share to Their Chinese Competitors?

First Solar (FSLR) reported Q3 earnings with revenue down from $520M of Q2 to $480M, however the company beat on EPS by 0.05c margin. The company raised 2009 guidance to $1.975B to $2.025B from previously announced numbers.

One positive movement in the solar sector is that inventory is getting lower according to FSLR's CEO. The inventory depletion is across the whole solar sector, which is positive for the rest of the industry. For the rebate program, it is not working as expected according to the company. It is likely Chinese solar names are gaining market shares in Europe because company like Trina Solar and Solarfun Power  raised shipment guidance for Q3 a few weeks back. The cost base is much more competitive for Asian solar companies. Overall First Solar presented a mixed earnings report (conference call transcript here).

We also had Sunpower earnings reported last week. The company said its third-quarter profits fell 48 percent to 13 cents per share. On the bright side, excluding one-time charges, adjusted earnings amounted to 42 cents per share, beating Wall Street estimates of 40 cents per share. For the full year, SunPower said it expects adjusted earnings to be between $1.15 per share and $1.25 per share on revenue of $1.43 billion to $1.5 billion. That's slimmed down from its July estimates of $1.15 per share to $1.60 per share on revenue of $1.35 billion to $1.7 billion. Again the company cut Q4 outlook, despite acknowledging that the industry is improving significantly in terms of demand. That may mean shipments from Chinese solar companies are gaining momentum because they are more competitive. Evidence of this is LDK recently joining TSL and SOLF and raising Q3 and 2009 shipment guidance.

Disclosure: Long FSLR, SOLF and TSL.