The price of Canadian Solar stock (CSIQ) dropped 18 percent by the end of the day Thursday due to a less-than-robust fourth quarter earnings statement and a somewhat bleak first quarter outlook for 2011.

The Chinese-owned company performed well and brought in quarterly revenue greater than expected at $452.7 million to Wall Street’s estimate of $417.56 million. But otherwise the news was dark when the company reported its fourth quarter results and forecast its first quarter of 2011 in a teleconference early Thursday.

Canadian Solar CEO Shawn Qu said the company is grappling with higher production costs, due to the rising values of certain raw materials used in solar panel production like silver, lower average selling prices for panels and a reduced production volume during the Chinese New Year.

Those changes in the market will drive Canadian Solar’s margin down from 17 percent in the fourth quarter of 2010 to 14 or 15 percent in the first quarter of 2011, according to market reports.

Qu said that while the outlook isn’t as robust as expected, it’s still strong, and the company will still ship 1,200 to 1,300 megawatts of solar photovoltaic technology in 2011.

He said domestic outlooks in Canada, where the company is currently contracted to build the majority of the country’s major utility-scale solar farms, are very strong.

Canadian Solar is already committed to build 140 to 150 megawatts there over the next year. The total number of megawatts in the pipeline is only between 400 and 500, Qu said.

“Also, our growth efforts worldwide have gained momentum,” Qu said in the phone conference.

That global geographic diversification caused analysts to ask how exposed and vulnerable the company is to fluctuation in the European market.

Italy, one of the world’s leaders in solar energy development, is expected to revise its subsidy schedule in April.

One analyst asked if Canadian Solar has been asked to halt production for any proposed or pending projects there.

“We do see some customers ask us to postpone some of the shipments,” Qu said. “But we do believe quarter 1 will be at least at level with quarter 4 shipment numbers.”

Pictured: Italy’s Rovigo PV plant. A project for which Canadian Solar provided the modules.