When companies forecast lower sales or profits, their stocks usually take a hit. It's not always easy to tell whether it's having a fire sale or burning down. Maybe it is time to get out -- or maybe it's time to buy more!

Last week, polysilicon equipment maker GT Advanced Technologies (NAS: GTAT) said delayed orders and potential new tariffs on Chinese solar cells will likely add up to third-quarter losses. It said it could lose as much as $0.05 per share, though it's also possible it might produce a $0.02 profit, but either scenario well below the $0.21 analysts were expecting.

Now don't go blindly selling into its bearish report -- you still need to do some research. Use the announcement as a jumping off point for additional research.


GT Advanced Technologies snapshot

Market Cap $770 million
Revenue (TTM) $892 million
1-Year Stock Return (14.4%)
Return on Investment 24.6%
Est. 5-Year EPS Growth 10%
Dividend and Yield N/A
Recent Price $6.49
CAPS Rating ****

Source: FinViz.com N/A = not applicable; GT doesn't pay a dividend.

Free is for me
Solar is a busted industry marred by a cloudy future of slashed subsidies, myriad bankruptcies, and a supply glut that pinches margins. With the loss of government support, there's a serious hole that's been created in demand, so much so that the industry is giving away their product. I'm actually having a solar panel system installed free of charge with the company maintaining it at no cost to me for 20 years while guaranteeing electricity rates below those I currently pay my utility. The economics of the deal make sense for me -- I'm not so sure about everyone else.

Although GT believes the delayed orders worth about $50 million will show up in the fourth quarter, the proposed tariffs European governments are mulling over could wreck its business because China accounted for more than half its revenue last year. Worse, the U.S. is already in the midst of a trade war with China over solar, having levied duties of 31% against Chinese solar cell and wafer manufacturers. In retaliation, China opened up an investigation on imports of solar-grade polysilicon from the U.S.

Suntech Power (NYS: STP) , the top Chinese solar-panel maker, is at risk of losing its New York Stock Exchange listing because of its share price, which frequently trade below $1 a stub these days. Like LDK Solar (NYS: LDK) and Trina Solar (NYS: TSL) , both of which have seen their core markets wither, Suntech is having to cut production and slash its workforce.

LEDing the way
Yet unlike many other solar names, GT has something of a backup plan in its LED sapphire business. At the same time it was announcing probable losses because of solar, it also said it had received a $29 million follow-on order for furnace units to be used in equipment to manufacture mobile phones. It believes sapphires could become a more cost-effective alternative to other materials being used, such as Cornings' (NYS: GLW) scratch-resistant Gorilla Glass.

The operating segment accounts for 22% of GT's revenues, but less than 19% of its gross profits. Falling prices have weighed heavily on the industry, impacting other sapphire producers like Rubicon Technology. But prices haven't fallen far enough yet to make sapphire a real threat to Corning.

According to analysts at Sterne Agee, Gorilla Glass sells for around $0.15 per square inch compared to exceptionally conservative estimates of $3 per square inch for sapphire. It wouldn't take much to cause the sapphire business to grow exponentially -- nabbing just 2% of the smartphone market would double the industry's size -- but prices have to fall a lot further, and low prices are already a bane to the players there now.

It's a free-for-all
At less than five times earnings estimates and nearly half its expected growth rate, GT does look cheap at these levels. While it did reiterate its full-year guidance, underscoring its belief that its orders will come through, the solar industry remains too weak at the moment to believe GT will advance much further at the moment. The sapphire line, while holding promise, isn't competitive enough yet in either smartphones or its core LED business to warrant an investment.

I've rated it to underperform the markets on Motley Fool CAPS, and won't change that even after the pullback in its price, but tell me in the comments box below if you think there's a chance GT Advanced Technologies will still shine.

Looking under rocks
Corning remains an innovative powerhouse with hands in several growth industries. The Motley Fool's brand-new premium report breaks down the opportunities -- and the risks! -- the company faces, all in easy-to-follow, plain English. The offer also includes a full year of updates on Corning's progress. Click here to get started now.

The article GT Advanced Technologies Just Lowered the Boom originally appeared on Fool.com.

Fool contributor Rich Duprey holds no position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Corning. Motley Fool newsletter services have recommended buying shares of Corning. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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


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Gumby

I always feel that rooftop solar installments is more beneficial to the elitiists with their McMansions than to the mass in general . This is why I favor solar powerplants over rooftop solar. Most utilties if not all of them has tiered prices for kilowatthours used with the losest price tier as baseline of about 300 kilowatthours a month. If the ratepayer used up the baseline allotment in any given month, he start paying higher rate per kilowatthour above 300 baseline kilowatthours . You may pay 10 cents at baseline then 20 cents at second tier then 35 cents at the highest tier usually charged to big Mcmansions. Mcmansions uses far more electricty than condos or apartments. Now , the mcMansion owners get the unfair advantage of free solar installations that elminate the highest tier price they paid . this is a double windfall for the Mcmansion owners. Nobody cares as long as it creates jobs for rooftop solar workers. The utility will end up paying for it with the blessing of the PUC down the years.. it charges twice as much to install a watt on a rooftop than out in the boonies . it is probably Ok to install solar on big box stores and sprawling office complexes which is about half way between in costs . Also around the outskirts of towns and cities that want own local solar power that can be easily hooked up to the nearby high volt lines with a new substation. I am talking about at least 500Kwatt installations and upwardly.. Installing a 6Kwatt on a Mcmansion is really unfair to the rest of us.. and it wont do much anyway !! except to save the rich plenty they dont need..This s probably the rich got irked and dumped solar stocks ... The rich only thinks for themselves..

September 24 2012 at 3:19 PM Report abuse rate up rate down Reply
Gumby

I always feel that rooftop solar installments is more beneficial to the elitiists with their McMansions than to the mass in general . This is why I favor solar powerplants over rooftop solar. Most utilties if not all of them has tiered prices for kilowatthours used with the losest price tier as baseline of about 300 kilowatthours a month. If the ratepayer used up the baseline allotment in any given month, he start paying higher rate per kilowatthour above 300 baseline kilowatthours . You may pay 10 cents at baseline then 20 cents at second tier then 35 cents at the highest tier usually charged to big Mcmansions. Mcmansions uses far more electricty than condos or apartments. Now , the mcMansion owners get the unfair advantage of free solar installations that elminate the highest tier price they paid . this is a double windfall for the Mcmansion owners. Nobody cares as long as it creates jobs for rooftop solar workers. The utility will end up paying for it with the blessing of the PUC down the years.. it charges twice as much to install a watt on a rooftop than out in the boonies . it is probably Ok to install solar on big box stores and sprawling office complexes which is about half way between in costs . Also around the outskirts of towns and cities that want own local solar power that can be easily hooked up to the nearby high volt lines with a new substation. I am talking about at least 500Kwatt installations and upwardly.. Installing a 6Kwatt on a Mcmansion is really unfair to the rest of us.. and it wont do much anyway !! except to save the rich plenty they dont need..This s probably the rich got irked and dumped solar stocks ... The rich only thinks for themselves..

September 24 2012 at 3:19 PM Report abuse rate up rate down Reply
Gumby

I always feel that rooftop solar installments is more beneficial to the elitiists with their McMansions than to the mass in general . This is why I favor solar powerplants over rooftop solar. Most utilties if not all of them has tiered prices for kilowatthours used with the losest price tier as baseline of about 300 kilowatthours a month. If the ratepayer used up the baseline allotment in any given month, he start paying higher rate per kilowatthour above 300 baseline kilowatthours . You may pay 10 cents at baseline then 20 cents at second tier then 35 cents at the highest tier usually charged to big Mcmansions. Mcmansions uses far more electricty than condos or apartments. Now , the mcMansion owners get the unfair advantage of free solar installations that elminate the highest tier price they paid . this is a double windfall for the Mcmansion owners. Nobody cares as long as it creates jobs for rooftop solar workers. The utility will end up paying for it with the blessing of the PUC down the years.. it charges twice as much to install a watt on a rooftop than out in the boonies . it is probably Ok to install solar on big box stores and sprawling office complexes which is about half way between in costs . Also around the outskirts of towns and cities that want own local solar power that can be easily hooked up to the nearby high volt lines with a new substation. I am talking about at least 500Kwatt installations and upwardly.. Installing a 6Kwatt on a Mcmansion is really unfair to the rest of us.. and it wont do much anyway !! except to save the rich plenty they dont need..This s probably the rich got irked and dumped solar stocks ... The rich only thinks for themselves..

September 24 2012 at 2:42 PM Report abuse rate up rate down Reply
Gumby

I always feel that rooftop solar installments is more beneficial to the elitiists with their McMansions than to the mass in general . This is why I favor solar powerplants over rooftop solar. Most utilties if not all of them has tiered prices for kilowatthours used with the losest price tier as baseline of about 300 kilowatthours a month. If the ratepayer used up the baseline allotment in any given month, he start paying higher rate per kilowatthour above 300 baseline kilowatthours . You may pay 10 cents at baseline then 20 cents at second tier then 35 cents at the highest tier usually charged to big Mcmansions. Mcmansions uses far more electricty than condos or apartments. Now , the mcMansion owners get the unfair advantage of free solar installations that elminate the highest tier price they paid . this is a double windfall for the Mcmansion owners. Nobody cares as long as it creates jobs for rooftop solar workers. The utility will end up paying for it with the blessing of the PUC down the years.. it charges twice as much to install a watt on a rooftop than out in the boonies . it is probably Ok to install solar on big box stores and sprawling office complexes which is about half way between in costs . Also around the outskirts of towns and cities that want own local solar power that can be easily hooked up to the nearby high volt lines with a new substation. I am talking about at least 500Kwatt installations and upwardly.. Installing a 6Kwatt on a Mcmansion is really unfair to the rest of us.. and it wont do much anyway !! except to save the rich plenty they dont need..This s probably the rich got irked and dumped solar stocks ... The rich only thinks for themselves..

September 24 2012 at 2:41 PM Report abuse rate up rate down Reply
Gumby

I always feel that rooftop solar installments is more beneficial to the elitiists with their McMansions than to the mass in general . This is why I favor solar powerplants over rooftop solar. Most utilties if not all of them has tiered prices for kilowatthours used with the losest price tier as baseline of about 300 kilowatthours a month. If the ratepayer used up the baseline allotment in any given month, he start paying higher rate per kilowatthour above 300 baseline kilowatthours . You may pay 10 cents at baseline then 20 cents at second tier then 35 cents at the highest tier usually charged to big Mcmansions. Mcmansions uses far more electricty than condos or apartments. Now , the mcMansion owners get the unfair advantage of free solar installations that elminate the highest tier price they paid . this is a double windfall for the Mcmansion owners. Nobody cares as long as it creates jobs for rooftop solar workers. The utility will end up paying for it with the blessing of the PUC down the years.. it charges twice as much to install a watt on a rooftop than out in the boonies . it is probably Ok to install solar on big box stores and sprawling office complexes which is about half way between in costs . Also around the outskirts of towns and cities that want own local solar power that can be easily hooked up to the nearby high volt lines with a new substation. I am talking about at least 500Kwatt installations and upwardly.. Installing a 6Kwatt on a Mcmansion is really unfair to the rest of us.. and it wont do much anyway !! except to save the rich plenty they dont need..This s probably the rich got irked and dumped solar stocks ... The rich only thinks for themselves..

September 24 2012 at 2:41 PM Report abuse rate up rate down Reply
Gumby

I always feel that rooftop solar installments is more beneficial to the elitiists with their McMansions than to the mass in general . This is why I favor solar powerplants over rooftop solar. Most utilties if not all of them has tiered prices for kilowatthours used with the losest price tier as baseline of about 300 kilowatthours a month. If the ratepayer used up the baseline allotment in any given month, he start paying higher rate per kilowatthour above 300 baseline kilowatthours . You may pay 10 cents at baseline then 20 cents at second tier then 35 cents at the highest tier usually charged to big Mcmansions. Mcmansions uses far more electricty than condos or apartments. Now , the mcMansion owners get the unfair advantage of free solar installations that elminate the highest tier price they paid . this is a double windfall for the Mcmansion owners. Nobody cares as long as it creates jobs for rooftop solar workers. The utility will end up paying for it with the blessing of the PUC down the years.. it charges twice as much to install a watt on a rooftop than out in the boonies . it is probably Ok to install solar on big box stores and sprawling office complexes which is about half way between in costs . Also around the outskirts of towns and cities that want own local solar power that can be easily hooked up to the nearby high volt lines with a new substation. I am talking about at least 500Kwatt installations and upwardly.. Installing a 6Kwatt on a Mcmansion is really unfair to the rest of us.. and it wont do much anyway !! except to save the rich plenty they dont need..This s probably the rich got irked and dumped solar stocks ... The rich only thinks for themselves..

September 24 2012 at 2:41 PM Report abuse rate up rate down Reply
Gumby

I always feel that rooftop solar installments is more beneficial to the elitiists with their McMansions than to the mass in general . This is why I favor solar powerplants over rooftop solar. Most utilties if not all of them has tiered prices for kilowatthours used with the losest price tier as baseline of about 300 kilowatthours a month. If the ratepayer used up the baseline allotment in any given month, he start paying higher rate per kilowatthour above 300 baseline kilowatthours . You may pay 10 cents at baseline then 20 cents at second tier then 35 cents at the highest tier usually charged to big Mcmansions. Mcmansions uses far more electricty than condos or apartments. Now , the mcMansion owners get the unfair advantage of free solar installations that elminate the highest tier price they paid . this is a double windfall for the Mcmansion owners. Nobody cares as long as it creates jobs for rooftop solar workers. The utility will end up paying for it with the blessing of the PUC down the years.. it charges twice as much to install a watt on a rooftop than out in the boonies . it is probably Ok to install solar on big box stores and sprawling office complexes which is about half way between in costs . Also around the outskirts of towns and cities that want own local solar power that can be easily hooked up to the nearby high volt lines with a new substation. I am talking about at least 500Kwatt installations and upwardly.. Installing a 6Kwatt on a Mcmansion is really unfair to the rest of us.. and it wont do much anyway !! except to save the rich plenty they dont need..This s probably the rich got irked and dumped solar stocks ... The rich only thinks for themselves..

September 24 2012 at 2:41 PM Report abuse rate up rate down Reply