The shares of First Solar, Inc. (NASDAQ: FSLR) have started the week on a rocky note. Not only did Friedman, Billings, Ramsey & Co. downgrade the stock from Market Perform to Underperform, the alternative energy issue was also the topic of a skeptical Barron's article over the weekend.

In a note to clients, brokerage firm Friedman cited weak polysilicon prices and the stock's overrich valuation for its downgrade. FSLR closed last Friday at $191.72 per share, compared to Friedman's price target of $110.

Meanwhile, the cautious Barron's write up [subscription required] observes that the Intersolar trade show begins Wednesday in Munich, and pits FSLR against many lower-priced rivals. "One leading customer says it will ditch First Solar's 'thin-film' panels if crystalline silicon alternatives keep getting cheaper.

That seems likely. Silicon prices are expected to drop another 30% by year end. First Solar profits -- and its shares -- could get cut in half," commented the financial paper.

Solar energy products company Trina Solar Limited (NYSE: TSL) released very bright 3Q 2007 results on November 21. The company has been named #1 on Deloitte Technology China Fast 50. Trina Solar posted a total revenue increase of 9.7% to $82.6 million. Gross profit increased 16.7% and total megawatt shipments increased 4%. YTD, the numbers are impressive. Total revenues are up 164%, gross profit is up 92%, operating income is up 76% and net income is up 145%.

These numbers, however, must be tempered with the realization that trina Solar is still very much in its early stages of growth and most of its free cash flowe must be plowed back into the company to increase manufacturing capacity. Operating income dipped 14% in 3Q 2007, cost of revenues increased 8%, interest expense increased, as did operating expenses, administrative expenses, selling expenses and the R & D budget.

Currently, Trina Solar has a manufacturing capacity of 150 MW (megawatts) of solar modules, but plans to double the size of the company to 350 MW by the end of 2008. Trina Solar has already locked in contracts for much of its polysilicon supplies through 2013, and has already sold 100% of its first module production capacity in 2008 and 50% of its second module production capacity.

Trina Solar is in the initial stages of planning for its own $1 billion polysilicon production facility to supply its raw material needs in a cost effective manner. In addition to its existing client base in Germany, Italy and Spain, with its increased production capacity, Trina Solar is looking to expand its market base into the Netherlands, Belgium and France in 2008.

Chinese solar power manufacturer Trina Solar Limited (NYSE: TSL) is ablaze with double digit increases in net revenues, net income, operating income and the solar megawatt volume of units shipped. The company added 12 new customers in 2Q 2007 alone, and its manufacturing capacity is booked solid through the remainder of 2007. Good thing the company is in the midst of a tremendous manufacturing capacity expansion program. Currently, Trina Solar has a manufacturing capacity of 100 solar megawatts, set to increase by 50% to 150 solar megawatts by the end of 2007, and rise again to 350 solar megawatts worth of manufacturing capacity by the end of 2008. The sky really is the limit for Trina Solar.

Despite big increases in the cost of raw materials, Trina Solar's total net revenues in 2Q 2007 jumped 77% to $75.3 million, even though the average sales price dipped. Gross profit increased 49.5% to $14.2 million, and net income increased 51.4% to $7.2 million. Because Trina Solar is still in its start-up phase, operating expenses increased as did interest expense. Based on figures thus far reported in 2007, CEO Jifan Gao states FY net revenues will total $270-$200 million, and FY net income will be in the $34.5-$36.5 million range. Trina Solar has guaranteed contracts with suppliers for 90% of the necessary supply of polysilicon for 2007 orders, and 60% for 2008 orders. Trina Solar recently began dealings with various silicon reclamation companies to ensure a stable and moderately priced supply of necessary polysilicon to meet its present demand forecast.

In an odd state of affairs, most of Trina Solar's customers are in Germany, Italy, and Spain. The company does very little business in China. CEO Gao's remarks make no reference to this fact, only that climatic conditions and government policies make it easier to do business in southern European countries. Given China's unprecedented growth in demand for energy resources, one has to wonder why the Chinese government is so late coming to the solar-powered party.

Hoku Scientific Inc (NASDAQ: HOKU) subsidiary, Hoku Materials, just signed a pact with SunTech Power Holdings Co Ltd (NYSE: STP) wherein Hoku will sell and deliver polysilicon to Suntech beginning in mid-2009. The deal, which was announced yesterday after the markets closed, has sent the stock skyrocketing up nearly 60% to $7.97 in after-hours trading. SunTech closed yesterday at $32.28 and later gained 9c in the extended trading. Shares of Hoku and SunTech are currently trading up $7.38, or up 60.65%, and at $33.00, or up 2.11%, respectively.

The $678M agreement, which has a 10-year term and also allows either company to opt out of the last two years, provides for the delivery of polysilicon, used to make solar energy panels, at set prices. This deal follows an agreement in January between Hoku and Sanyo Electric Co Ltd (OTC: SANYY) that may bring an additional $370M in payments to the materials science company.

Hoku is currently in the process of building a $220M polysilicon production plant in Idaho in order to transition further into the solar industry. The plant will produce polysilicon for its own solar panel business, creating 200 jobs in the process, and will offer excess supply to the semiconductor market.

Analysts at investment bank Thomas Weisel believe this could be a good deal for Hoku, particularly amid its transition into the solar industry. The firm, however, is still concerned about Hoku's ability to raise $150M in debt financing, which it is seeking for the plant. Hoku believes it is currently on track with the plant, but if the company is unsuccessful in building the polysilicon plant or if it does not meet certain milestones with its products, the initial direct deposit must be returned to SunTech.