By Jennifer Kho
Trina Solar shares lost 11.9 percent of their value after the company beat analyst expectations in the fourth quarter but reported that margins were decreasing.
The stock dropped fell $4.73 to $36.49 in recent trading.
According to the unaudited earnings report, Trina’s net income from continuing operations more than doubled to $4.4 million, or $0.26 per diluted share, from $2.1 million in the year-ago quarter. Analysts had expected earnings of $0.16 per share.
Including discontinued operations, Trina Solar posted net income of $4.6 million, or $0.28 per share, up from $2.2 million, or $0.22 per share, in the fourth quarter of 2005. Net revenues also more than doubled to $38.8 million from $15.9 million in the same quarter in 2005.
But the company announced its gross margin dropped 26.2 percent in the third quarter to 23.3 percent—although it was up from 22.3 percent in the fourth quarter of 2005.
The solar industry has been watching for the possibility of falling margins as manufacturers have upped their production of solar equipment.
In its outlook for 2007, Trina announced it anticipates a further decline in average selling prices this year, but added it expects to grow revenue to between $270 million and $300 million for the full year, up from $114.5 million in 2006. It also expects net income in the range of $34.5 million to $36.5 million for 2007, up from $12.4 million for the full year in 2006.
The company had a rollercoaster IPO in December, but the stock has grown steadily since January. Earlier this month, Trina announced a deal with German solar star Q-Cells, which agreed to provide technical assistance and to buy at least 18 megawatts of Trina’s wafers.