First Solar Tops Q1, Sees Sunny Forecast Amid Solid Demand, Improved Efficiency; Malaysian Plant Ramping Up; Module firm's technology avoids silicon shortages with alternate compound

First Solar showed why it's a market leader Wednesday, crushing analysts' first-quarter estimates and raising its outlook again.

The company, which has the biggest market capitalization of any U.S.-traded solar stock, earned 57 cents per share for the quarter that ended March 29. That's up more than 700% from the year-ago period and more than 20% above the average forecast of analysts polled by Thomson Reuters.

Sales nearly tripled to $196.9 million, more than 7% over views.

Company officials touted a strong market and manufacturing improvements.

"Demand for our products remained robust during the quarter, and we continued to experience market demand in excess of supply," Chief Executive Michael Ahearn said in a conference call.

For 2008, the company expects sales of $975 million to $1.05 billion, well over analysts' estimates of $954.9 million.

In February, the company said it expected sales of $900 million-$950 million -- an improvement from an earlier forecast of $760 million-$800 million.

Shares of the Tempe, Ariz., solar-module maker rose 2.5% Wednesday to close at 291.99.

Rival SunPower fell slightly to 87.27, while Suntech Power rose 1.5% to 44.73.

"The fact that (First Solar) raised guidance and said demand is still stronger than their supply can address is probably a net-net positive for the overall industry," said Jonathan Dorsheimer, an analyst with Canaccord Adams.

After taking a pounding early in the year on fears of an oversupply, solar stocks have regained some of their momentum amid rising oil prices and optimism about demand.

IBD's "energy other" group, which includes solar stocks, has climbed more than 30% from its lows this year.

Solar is growing more popular worldwide as governments in Europe, Asia and North America put up incentives to buoy the industry while it strives to bring costs more in line with those of traditional energy sources.

Global solar photovoltaic market installations grew 62% in 2007, according to research firm Solarbuzz.

First Solar gave investors good news about how it's handling demand. It says its new plant in Malaysia is ramping up more quickly than its last big plant in Europe, company officials say.

That's a relief for investors, Dorsheimer says.

Daniel Ries, an analyst with Collins Stewart, said the Malaysian plant's four manufacturing lines are three to six months ahead of his expectations.

"That has a big impact," Ries said. "First Solar is always sold out. It gives them more to sell."

At the same time, the company is making production more efficient. First Solar said it boosted first-quarter output 3% over the previous quarter. Ries said he expected 1% or less.

First Solar's sales come largely from Germany, but the firm plans to expand its reach into the U.S.

The company says it's negotiating or running tests with utilities this year.

Several state governments have mandated utilities to derive more of their power from renewable resources.

Analysts say First Solar has a leg up on rivals with a unique technology that cuts costs.

Most photovoltaic solar companies make panels with a basic material called polysilicon. Soaring demand has sparked shortages and driven up prices.

Instead of silicon, First Solar uses a thin layer of a compound material called cadmium telluride.

During the analysts' call Wednesday, First Solar President Bruce Sohn said he sees no supply issues.