Canadian Solar was cautiously optimistic in its third quarter earnings announcement Thursday.

While revenue is down, stocks lost $1.01 per share and gross margins are lower than they have been, the company is still pressing forward and doesn’t feel strong enough pricing pressure to sell its solar modules below cost as many of its competitors have been doing.

Canadian Solar also has almost $691 million cash reserves while much of the competition is operating in the red.

We continued to strengthen our position as one of the four largest suppliers of photovoltaic modules in the world,” Shan Qu, Canadian Solar chairman and CEO said on an earnings call. “But more importantly, we did so while maintaining positive operating cash flow.”

Michael Potter, CFO, said the company is pushing its prices down to keep up with continuous industry-wide pricing decreases and expects to reach 55 cents per watt by the end of the year.

As prices continue to fall, inventory that doesn’t move quickly enough becomes increasingly less competitive. “Whatever inventory we have at the end of Q3 will negatively impact fourth quarter figures,” he said.

Because of that, Canadian Solar has been focusing on moving inventories, Potter said. Third quarter inventories were $317.8 million, down from $343.8 million in the second quarter.

Competitors have been forced to sell solar modules at a loss because of industry oversupply. “We could certainly sell a lot more modules today if we were selling at a loss,” Potter said. “But that’s not something we’re willing to do.”

The company has broadened its business model and started investing in more utility-scale projects it will own and collect revenue on going forward.

It has more than 300 megawatts of projects with TransCanada scheduled to go online in the fourth quarter of this year or the first quarter of 2013 along with 800 megawatts in a SkyPower project that will be completed in phases over the next 18 months.

The solar company has shifted its supply so that it’s no longer importing Chinese-made modules to the United States, a change resulting from trade sanctions imposed earlier this year.

Canadian Solar has extensive operations in China. Qu said he’s seeing consolidation in that market and productions slowdown. “A lot of the third-tier manufacturers have already frozen operations,” he said.

The Chinese government is working to develop domestic demand for the oversupply of solar modules there.

While there have been some policy shifts, including free and easier grid connection for distributed generation projects, the government is still working on developing major incentives like a Feed-in-Tariff, he said.