On August 4, First Solar (Nasdaq: FSLR) reported net income for the second quarter of 2011 of $61.1 million (71 cents per share), down more than half the $159.0 million ($1.87 per share) the company reported for the second quarter of 2010. Still, the company anticipates full-year 2011 earnings of $900 million to $960 million ($9 to $9.50 per share).

First Solar attributed the significant drop in income to lower average selling prices for solar modules throughout the world largely because of market instability in Italy, Germany and France.

Incentive programs in both Italy and Germany, two of the world’s top solar markets, experienced instability and reductions as the countries worked to balance their incentive programs.

“Customers delayed orders until the Europe markets were more solid,” First Solar CEO Rob Gillette said during a conference call discussing the earnings.

The lack of certainty in the European markets also led to lower module prices for PV manufacturers. First Solar partially offset what could have been larger losses by increased production and module efficiency, Gillette said.

“Shipments were up 6 percent quarter over quarter, which partially offset [the lower module prices],” he said.

The lowered results also were offset by increased demand in the U.S. and India.

First Solar has shipped more than 200 megawatts to India, according to Gillette. The country has contracted for 250 megawatts more in First Solar modules for the rest of 2011 and into 2012.

First Solar’s pipeline of projects in the U.S. could also reach 450 megawatts in 2011.

“The pipeline will serve as a buffer against uncertainty in the European market,” said Mark Widmar, the company’s chief financial officer.

In the first half of 2011, First Solar also made significant capital investments to increase its efficiency of its modules and reduce balance-of-system (BOS) costs. And investment in the second quarter far outpaced that in the first quarter, according to Widmar.

“We invested $52 million more than in the first quarter,” he said.

Despite the dismal second quarter, the company projects that the second half of 2011 will be much better.

The company spent money in the first and plans to reap benefits from those investments in the second half, according to Gillette. For instance, the company’s Aqua Calliente project should start producing revenue in the second half of the year. And construction on new lines is completed, with new lines in Malaysia reaching full production and a new line in Frankfurt-Oder, Germany, starting production early and ramping up through the third quarter of 2011.

With more production lines coming online now and in coming months, First Solar also projected that in 2012 it would build 1 gigawatt of projects.

Image courtesy of First Solar.