Summary:

This morning, Hoku Scientific posted its results for the March quarter and then saw its stock tumble. It followed a pattern set by shares of JA Solar on Monday and LDK today, as well as other solar companies in recent weeks. Each company’s stock slid for […]

This morning, Hoku Scientific posted its results for the March quarter and then saw its stock tumble. It followed a pattern set by shares of JA Solar on Monday and LDK today, as well as other solar companies in recent weeks.

Each company’s stock slid for a different reason, suggesting investors are looking for any excuse to move out of the speculative issues. Hoku abruptly shifted its plans for financing a crucial new silicon plant; LDK saw its profit margins deflate; and JA’s surprised the Street by saying it would raise $300 million.

Shares of Hoku opened Tuesday down 9 percent at $7.50 after it posted a loss of 11 cents a share, excluding certain items, well below the 5-cent loss that analysts, on average, were expecting. The company also said that it’s backing out of a plan with Merrill Lynch to borrow as much as $185 million to finance a polysilicon plant in Idaho. Instead, it wants to raise money through a stock-and-warrants offering on a U.S. exchange.

An analyst told Reuters that the important thing was that the plant be built, not how it’s financed. Until then, revenue forecasts will be hard to predict. Hoku expects the Idaho plant, costing $390 million, to start production in October. Sanyo, Suntech, Solarfun and others have already committed $240 million in costs.

That mix of disappointing quarterly numbers with reassurance about the new plant — together with an announcement to extend an eight-year contract with Solarfun to 10 years — took the edge off the initial tumble in Hoku’s shares. The stock closed at $7.71, down 6.6 percent but above the morning low point.

That down-then-up trajectory follows a path forged by JA Solar on Monday. JA shares fell 6 percent Monday to $22.10 as revenue tripled and profit beat the Street by four cents a share. JA also said it would sell $300 million in convertible notes. Given JA’s healthy cash flow, the news wasn’t expected, leaving analysts wondering what it had up its sleeve: faster expansion, maybe, or a move into new areas.

By Tuesday’s market close, all was forgiven. JA Solar finished the day up 7.2 percent at $23.70, higher than where it stood before its earnings report.

As Katie Fehrenbacher noted earlier today, LDK’s stock slid as stronger earnings were undermined by falling profit margins. LDK recovered some too, closing at $35.94, down 4 percent but above the intraday low of $35.34.

Why do investors seem to harp on the negative? The selling could be coming from investors who bought the stocks at a lower price, or among daytraders who are shuffling money among different names. It doesn’t spell bad news for the sector, but it does suggest that when someone wants to sell, new buyers may feel a little nervous about taking the shares off their hands.

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By Kevin Kelleher

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