Why Power-One's Shares Lost Power

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of inverter maker Power-One (NAS: PWER) fell 11% today after the company released earnings for the first quarter.

So what: Revenue fell 8% to $226 million but still topped estimates of $204.2 million from analysts. But the bottom line was much worse, with profit falling to $5 million, or $0.03 per share, from $0.30 a year ago. Analysts expected $0.08 per share in profit.

Now what: It's a dog-eat-dog world in the solar industry right now, and inverter manufacturers are feeling the pain that module makers have been dealing with for more than a year. The company is expecting a strong second quarter as people install solar before feed-in tariff cuts, but my concern would be after that. Inverter competition is just starting to heat up, and I don't see anything that indicates Power-One will increase profitability in the short term, which could leave shares out to dry.

Interested in more info on Power-One? Add it to yourWatchlist.

At the time thisarticle was published Fool contributor Travis Hoium has no position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings, or follow his CAPS picks at TMFFlushDraw.Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.