Good day everyone and welcome to the First Solar Fourth Quarter and Year End 2007 Earnings Conference Call. This call is being webcast live on the Investor Section of First Solar's website at www.firstsolar.com. At this time all participants are in the listen-only mode. As a reminder, today's call is being recorded. I would now like to turn the program over to Ms. Erica Mannion, Investor Relations for First Solar Incorporated. Erica, you may begin.

Thank you. Good morning everyone and thank you for joining us for First Solar's fourth quarter 2007 year end conference call. This morning, the company issued a press release announcing its fourth quarter and 2007 year end financial result. If you did not receive a copy of the press release, you can obtain one from the Investor Section of First Solar's website at www.firstsolar.com. You may listen to an audio replay of this conference call by dialing 888-203-1112 if you are within the United States or 719-457-0820 if you are not calling from within the United States. Please enter reservation number 9023734. The audio replay will remain available until February 16th at 10:00 AM Eastern Time. Also a webcast will be available in approximately 2 hours on the Investor Section of the Company's website and if you're a subscriber of FactSet, you can obtain a written transcript of the conference call within 2 hours. With me today on the call are Mike Ahearn, Chief Executive Officer; Jens Meyerhoff, Chief Financial Officer; and Bruce Sohn, President. Mike will begin with an overview of the company's achievements during 2007, and the company's progress during the fourth quarter. Jens will provide you with fourth quarter and 2007 year end financial results and an update to the financial guidance for 2008. We will then open the call up for questions. All financial numbers that are reported and discussed on this call today will be based on Generally Accepted Accounting Principles. The company has allocated approximately 1 hour for today's call. During the Q&A period, as a courtesy to those individuals seeking to ask questions, we ask that participants limit themselves to one question and one follow-up question. Now, I would like to make a brief statement regarding forward-looking remarks that you may hear on…

Thank you, Erica. Thanks for participating in today's fourth quarter and 2007 year end earnings call. 2007 was another strong year for First Solar. We increased net sales by 273% over 2006 to $504 million and increased module production volumes by 244% over 2006 to over 200 megawatts. We increased salable watts per module by 10% over 2006 to an average of 70.3 watts per module for the full year while, making significant gains in module throughput. We reduced our cost per watt by 12% over 2006 to an average $1.23 per watt for the full year and we achieved cash flow from operations of $200 million in 2007. While, delivering these strong near-term results, we also laid the foundation for profitable growth and continued costs reductions over the next several years. More specifically, we entered into additional front take-or-pay contracts under terms extending to 2012 which brought our total contracted sales for the period 2008 to 2012 to over 3 gigawatts and $5.9 million based on an assumed exchange rate of $1.30 per euro. The revenue provided by these contracts is enabling us to expand our production capacity, which is the key driver to our cost reduction efforts. We expanded our key customer base from six customers in 2006 to 12 customers by the end of 2007. And the addition of these customers had extended our geographic market coverage to all European markets with meaningful feed-in tariffs. We also demonstrated the benefits of our Copy-Smart methodology for replicating factories by successfully building and ramping our Frankfurt/Oder factory ahead of schedule and at operating performance comparable to existing plants. In the acquired Turner Renewable Energy which has been renamed First Solar Electric Company, the acquisition added balance of plant engineering and project management skills to the company that enable us…

Thank you, Mike and good morning. During the fourth quarter of 2007, we were able to continue to demonstrate the scalability and operating leverage, underlying our technology and business model. Net sales for the fourth quarter were $200.8 million, an increase of $41.8 million over the third quarter of 2007, and an increase of $148.1 million compared to the same period of 2006. For the year 2007, net sales were $504 million and increased by $369 million over 2006. The strengthening euro contributed 43.8 million to our net sales, during 2007 when compared to 2006. Gross margin for the fourth quarter was 55.3%, up from 51.6% in the third quarter of 2007, and up from 48.6% in the same period of 2006. Gross margin benefited from the leverage typically experienced, in a steady state quarter as incremental sales contributed the four variable margins, in excess of 70% to the gross margin line. Gross margin in the quarter also benefited by approximately 1 percentage points due to further Euro appreciation over the prior quarter. Gross margin for 2007 reached 49.9% compared to 40.2% in 2006, and benefited by approximately 10 percentage points from year-over-year cost per watt reductions driven by increased conversion efficiency, throughput gains, and plant scale. Foreign exchange gains contributed 3 percentage points to our gross margin effectively offsetting the majority of our annual contractual price decline for 2007. In order to further reduce volatility around our euro exposure, we have executed additional forward contracts between now and the first quarter of 2009 that allow us to sell 226 million euro at an average exchange rate of $1.45, hedging approximately 36% of our expected 2008 revenues. Our cost per watt for the fourth quarter averaged a $1.12 per watt including $0.03 of stock based compensation representing a 6% decline…

Thank you. [Operator Instructions]. We will take our first question from the line of David Edwards, your line is now open, its with Morgan Stanley.

Good morning. One quick question for you, if you can talk a little bit about First Solar Electric Company, can you give us an idea of some milestones that you're looking for that in that business?

Yeah, David this Mike. Yeah, I think for 2008 the milestones are really around deploying several pilot projects to begin to form some key relationships and validate our cost consistent performance assumption, and we expect that to provide a basis to roll into 2009 and beyond and start building the higher volumes. So, I think of 2008 really as a year to lay the ground work.

Alright, great. Thanks a lot.

We'll take our next question from the line Steve O'Rourke with Deutsche Bank. Your line is now open.

Thank you, good morning. Can you help us understand, how we should think about ongoing efficiency improvements and can you speak a little bit to the repeatability of efficiency during an extended production run, that is it tightly distributed around the average that you give?

Yeah, let see. I mean here is... the way we think about efficiency in general, to achieve the targets we set for 2010 to 2012 in terms of pricing capability. Our average conversion efficiencies need to be in the range of 12%. And if you start from 2007 through 2012, that implies half a point a year of conversion efficiency improvement and we are obviously tracking to that. These efficiency improvements are largely event driven, so it's difficult to pin them down into time frames, certainly quarterly time frames and even annual. So, there is some lumpiness to how they get integrated if you will but we are tracking that and we still feel confident around this, around hitting the longer term objectives. In terms of the variants, the dispersion, there is some, its relatively tight, we saw... that is reflected in several power SKUs in our product line. I think that's basically an ordinary course type situation for us.

Okay and then one follow up. With the gross margin performance you have on fully ramped factories now, even if we start to assume you have some utility scale business building in over the next couple few years at lower gross margin ramping at its plants, is the long term guidance that you have for your model, should that be revised upward do you think?

No, I think Steve, at that this point in time, we still believe that the long term model is intact and as you know, I think if you look at the cost reduction, the cost per watt reduction is probably the key measure in here which was year-over-year 12%, which is slightly ahead of just a linear rise 10% underlying our long term grid parity goal. I think we believe those relationships are still intact. Also be mindful that there was a pretty sizeable contribution from a very strong euro build into that gross margin performance.

Fair enough and one last question. The question was asked about First Solar Electric, what should we expect on a utility scale this year as far as pilot programs building in, will there be any revenue derived from that do you think and is First Solar Electric focused only on utility scale projects right now?

There will be some revenues Steve. I wouldn't call it significant from an overall perspective, given the fact that what we are trying to do is execute on a few relatively small pilot projects to get through that validation process. Forgot the second half of that question.

Focus on utilities.

Oh, yeah, we got to focus on utility scale. That's correct. There are few projects that were carried over from Turner Renewable Energy that are of a distributed nature but the focus right now is just on utility.

Fair enough, thank you.

We will take our next question from the line of Michael Molner with Goldman Sachs. Your line is now open.

Hey, good morning, guys.

Good morning.

Question for you on your manufacturing inputs, specifically tellurium, how do you manage your input and specifically how much do you have under contract already and what is the risk that some of your inputs become scarce if other Cad-Tel players come to market.

So, Michael, we have multiple suppliers, who are qualified for both the raw materials off as well as for the subsequent compounding into Cad-Tel. So, we are managing those closely. When we make investment decisions like right now as Mike mentioned in his script, that we are building out roughly a gigawatt of capacity, right, we asses the capability of our supply chain again, for capacity expansions. And, so we will make a decision on those capacity expansions without checking the box, and so we feel comfortable with our supply chain situation on Cad-Tel and tellurium, in particular and something we continue to manage obviously and we got a team working like all other supply chain matters.

Okay. And, just one other question. It seems like every other day there is a new thin-film entrant being funded. And, two related questions, do you feel a potential massive over supply for thin-film and number 2, is it possible or even something you are looking at to use your technology on a flexible substrate?

Yeah, I mean okay, let me take the first question. I think, that well first of all, how do we think about a competitive threat? Primarily, it's around whether some company or a set of companies could come in to the market, while we are all dependent on PV subsidy pools and take a share of the market that we are counting on to be able to scale and achieve the cost reductions that lead to our targets over 2010 to 2012. We think if we get to the pricing capability targets that we have set for 2010 to 2012, very large markets open for everybody in the PV industry. Our competition really becomes cost of deal based solutions. So the question we look at is whether the threat that somebody takes share in the next several years that we are counting on to be able to scale and in that regard, we don't currently see a strong probability of that occurring. We feel pretty good about our position. To the extend that other thin-film technology to scale well and reach price points that can achieve the same kind of about group parity type pricing. We would think that's good for the industry and is eventually will occur. So that's sort of a thought on competition, in terms of over supply we also think there is a distinct possibility that that could occur sometime in the next year or two but the timing is difficult to handicap but that would be driven in our view more by more by crystal and silicon supplies rather than thin film that reached in the short term. Oh, on flex substrate, yes, Cad-Tel... its capable of being deposit on flex substrates, its not something but its been our product road map currently but it is not a technical barrier to doing that, so we have looked at it from time to time.

Okay. Great, thank you.

We will take our next question from the line of Satya Kumar with Credit Suisse, your line is now open.

Yeah, hi thanks, what was the actual ASP in the fourth quarter?

Can you ask that again?

What was the actual ASP of your products in the fourth quarter?

2.60.

2.6?

Yes.

What are you assuming in your '08 guidance for the un-hedged portion of the euro in terms of exchange rates?

On an average of $1.33.

$1.33 and you now have seven lines up and running between Germany and Ohio, your city produce 77 megawatts, I know one of the lines have a little bit high capacity but, what's the weighted capacity per line, how should we think about that, what's the mechanical group of potential and how can you...

I think mathematically you see right now, we are having a run rate right, annualized run rate for a line of about 44 megawatts.

It's still only at 11 megawatts, okay. And just last question, it was a great quarter but second time in row the numbers are coming significantly above guidance, why wouldn't you have pre announced and just was wondering what your thought process were there on that?

Okay, so I don't think we have to have a practice of pre-announcing the upside and total [indiscernible] on it.

And maybe just to reiterate what our practices has been on the guidance. We base the guidance on the production volumes that we are committing to the marketplace, that we were out trying to sell. And in a market environment where demand exceeds supply and there are uncertainties as we bring up new factories, it is prudent in our view to be somewhat conservative with respect to the expectations in the marketplace and so I think that as much as anything explains why we have been able to beat these guidance, that drives up the production numbers.

Will take our next question from Vishal Shah with Lehman Brothers, your line is now open.

Thanks for taking my question. Can you talk about what sort of considerations would be when you, for you to start thinking about your next set of capacity expansion, now that you have executed ahead of schedule on your Malaysia ramp?

Yeah. Vishal, there is a few things. I mean we start with the notion that we are currently building four factories at once and that is fully occupying our organization and our external partners. So we have got our hands full right now. In addition, our production line rate as we have been discussing have increased. So we have got more supply to work with from existing factories, which is obviously a good thing. The expansion of additional production capacity would really be driven by the need to meet existing demands or new demands with additional productions and that's something, we are assessing constantly. We do not have a set timeline or a rhythm to these expansion projects. So we will continue to asses that and it will largely be driven by market demand condition.

Okay, great. And one follow-up. On your 2009 capacity assumptions assuming a similar run rate and capacity expectations, what percentage of your total production do you think would be under long term contracts?

Well Vishal, since we really haven't given any guidance right on 2009, it is kind of hard question for us to answer right. I mean typically we have always talked about roughly a two-third capacity utilization we are striving for in our long term contracts, but that is more with respect to the build off, but I don't think we can give you a specific percentage here for 2009.

Okay, great. Thank you.

We will take your next question from the line of Rob Stone with Cowen and Company. Your line is now open. Robert W. Stone - Cowen & Company: Hi guys. Another nice job as usual.

Thanks Rob. Robert W. Stone - Cowen & Company: Looking forward to, related to your 2009, senior rates are coming down in some of the significant markets, Germany, Spain, and potentially market prices may go down in high single digits, may be as much as 10% in 2009. What are your customers, telling you about that forward view, is your 6.5% annual schedule adequate or what?

We think the current pricing is adequate to deal with the range of outcomes around these aggression rates, and as you can imagine when we negotiate at these long-term contracts, the uncertainties around feed-in rates, in the out years, was a key topic of discussion and we had comments for last couple of years, about why we set our prices so low, but the answer was to make these customers partially answer was to make these customers comfortable against the range of outcomes on feed-in rates and frankly interest rates. And we are still operating within the range that's priced into the contracts. So, we feel pretty confident about our ability to execute. Robert W. Stone - Cowen & Company: So, is it fair to say that, you are essentially operating now at a level below what you could do if you weren't on a long term schedule, in terms of ASPs?

Well, I guess, yes, if the question is today could we sell in the spot market at higher ASPs, it is probably true. It's probably been the case for the last couple of years. I think the issue is over the periods through 2012 we are going to see... we may well see supply demand in balance shifting and we've always thought it was a good trade off to get the visibility and go ahead and lock the prices down. Robert W. Stone - Cowen & Company: So, with respect to delivery schedule but I know you haven't given specific guidance for 2009 full year or never mind quarters, but do you see signs of continued steady deliveries or is there potential of any disconnect as we get to the end of this year.

We don't, I mean it's hard to say what happens in 2009. I think, in general by contracting a significant part of our production, we are attempting to become robust against market dislocations. And, we just have to get deeper into the year and see how things progress in terms of '09. Robert W. Stone - Cowen & Company: And finally with respect to the feed-in rate, the new numbers haven't been finalized yet for Spain and Germany, are you hearing anything different than the last proposed that the rates have been discussed?

No, it's pretty much the same discussions as several months ago. Robert W. Stone - Cowen & Company: Okay, thanks very much.

We'll take our next question from the line of Eric Brown with Banc of American Securities. Your line is now open.

Hi, there have been some rumors flowing around, maybe if you could address the issue whether you are having a yield problems in the field?

To our knowledge, we are not. And, we checked with the number of our customers and we have as you know pretty extensive internal quality controls and external field testing data. So, we are not aware of anything Eric. I think based on the note you published late yesterday, I think you know more about it than we do frankly, at this point as to where that rumor may have come from but we don't have any information now.

Okay. Jens, on the exchange rate question before the $1.33, that was associated with the non-hedged or is that the average for the entire...?

No, that's the un-hedged portion. The hedge was valued at about 145.

Okay. The comments on the ramp of Malaysia, so is the Malaysian facility now going to ramp the first one at least similar to how the German facility ramp.

Eric, this is Bruce. The ramp is on the same schedule that we had mentioned previously. Malaysia one, basically mimics Frankfurt/Oder 12 months later. So, it's on a similar start-up schedule with ramping in Q2 and Q3 and will be at full production in Q4. Both Mike and Jens made reference to the fact that we anticipate the ability to have a slightly steeper ramp than we had communicated previously and that's reflected in the updated guidance.

Okay, and so we expect that Malaysia two through four should have the similar ramp pace as well?

We are still looking at those. The current schedule is for the original plants, so they maintain the current schedule and we watch as the equipment comes in and gets qualified and we will communicate any changes as we see them.

Okay and then one more, on the DT Solar or Turner Renewable legacy projects, what kind of influence is that in the '08 revenue guidance and what kind of margins, gross margins will you expect from that business?

Yeah, I think if you look at the impact out of First Solar Electric on 2008 it can be deemed immaterial as we are talking sub 5% levels.

Okay, thanks.

We will take our next question from the line of Jesse Pichel with Piper Jaffray. Your line is now open.

Yes, Hi Mike and Bruce. Could you give us some additional color on the utility sales channel in terms of how many utilities Mike do you think will deploy trials in '08 and are you seeing greater interest from the European utilities, thanks to the new EU directives for 20% renewable targets by 2020?

Well, on European side, first of all, Electric is just focusing on U.S. utility right now.

Okay.

We do have through our... on module sales efforts in U.S. we had exposure to utilities in Europe there. We are not seeing any greater interest from that now, I think the discussions are sort of proceeding along the same lines they have in the last six to 12 months. In terms of First Solar Electric, you know we are at such an early stage of flushing out the division strategy and plans that we don't really talk about those kind of details and if we did I mean it wouldn't be very good information because its still in flux, its still dynamic at this point. But there are a number of states that have RPS. Our focus right now is on load serving entities that have a legal or regulatory requirement to procure renewable energy. That's driving off these RPS programs and there are obviously a number of potential utilities in that space.

Would you potentially sell your panels through an electrical utility components company, you know as kind of an OEM solution or would you... to the utility? [Technical Difficulty] And as cash structures come down across the globe, how that might play into our hand competitively?

Yes, we've focused but from the time when we went to market in 2003 through today, we've focused on larger sized systems both ground-mounted and roof-mounted. And the roof-mounted applications that we are speaking of are primarily commercial industrial roof-systems, so larger systems. These are the most efficient channels for us in terms of optimizing the system level performance and economics and scaling the company getting large volumes in to the market in concentrated ways where we can observe and understand system performance and scale our company effectively. So strategically we like the larger system size and the modules look well whether they are mounted underground or on roof top. Now that we are achieving the efficiencies north of 10%, we don't see any reason why we couldn't if we chose to bring those system sites down, all the way down to 3 kilowatts type size, to the residential market. But we haven't done that today and part of it is, we are having a hard enough time supplying the demand in the segments were operating at and serving our customers and strategically we think we are on the right path here and we have to start large and scale down over time.

And so maybe just a bit up of follow up there, as customers, there were time look at the cost efficiency metrics and tariffs do come down and you'll be in a better position I suppose to compete even with your lower efficiency. And maybe put it another way, if there is another supply situation in the traditional PV arena, you can take advantage of that in the market, clearing at a lower price lower price may play into your hands?

Well it's possible. I mean the way we are thinking about that is, you know we do have some pricing capability here and we would like to use that to find ways to broaden the market broadly entire time, to the solar industry by finding markets that aren't relying on traditional PV subsidies and using the pricing capability to build in those markets. And I think the U.S. utility RPS market is an example but there could be as you say smaller systems driven markets as well. It doesn't mean we wouldn't continue to participate in the PV subsidized markets at the same time and in fact there is long term contracts in that revenue streams pretty important to our ability scale and hit these cost targets but I think its helpful for us and the industry to work to expand the overall market and in ways to demonstrate decreased reliance on the traditional subsidies rather than piling on and taking share from the highly subsidized market. So, that's the direction we'll likely get to move in.

We will take our next question from the line of Kelly Dougherty with Calyon Securities. Your line is now open.

Good morning and congratulations again. It's obvious that cost need to come down all along the value chain to get to grid parity and we saw the Turner acquisitions last year and its evidence that you have begun to move downstream, just wondering if this was a one off effort to break into the U.S. market or if we could possibly see something similar as you tried to get into other markets as well?

It's sort of hard to predict what the future will bring in that regard. I think we are in a stage right now where these markets are evolving and the learning is pretty iterative. I think the U.S. is the first real opportunity to try to expand outside these traditional PV subsidized markets. I think we are going learn a lot through the U.S. utility effort about what we need to occur elsewhere and I also think as channels mature, your need to do many things obviously than that issues, I would imagine that our roles will be dynamic in the channels overtime, as the markets mature.

So, there is not any kind of concerted effort at the top to vertically integrate further, this was just kind of an opportunity that you took advantage of in the U.S.?

Yes, it's true. I think in Europe and to state it in another way, in Europe we have very good relationships with highly capable partners if you will, better allowing us to serve that market very well. So, there would be no need to consider anything of a more vertical nature at this time.

Okay. Thank you very much.

We will take our next question from the line of Sanjay Shrestha with Lazard Capital Markets. Your line is now open.

Great, terrific. First of all, congratulations on a great quarter here, guys. Most of my question have been answered but, just a couple of quick one. In terms of the manufacturing output, its been phenomenal going from 25, 39, 44 but guys, are we now kind of running at the point where we are going to continue to make a gradual progress but a step change like that is probably not going to happen in the near future and probably more likely a longer term type of an event if that would have lay out?

Well, this is Bruce. The real strategy has been to progress towards our long range plan and to achieve our goals in that 2010 to 2012 timeframe. We really needed to continue to scale at a rate of about a 0.5% per year from '07 to 2012 from an efficiency perspective, talking about a 3% perspective from a line capacity and capability. The factories and engineers are working very hard to maintain the improvement rate. The company has a core value around continuous improvement as well as driving for results and so, they continue to look for all sorts of opportunities to improve the yield to de-bottleneck the line, improve cycle time, and generally improve the technology and the efficiency and so work is on going.

Got it, terrific. And, one quick follow-up and, given that you guys are focusing a lot in the utility market here in the U.S. and somewhat of an uncertainty here on the ITC front but, since majority of your focus is here on the pilot and the sort of the demonstration project right now, what's been the overall interaction up to this point? Can you guys talk a little bit about that as to some of the positives, some of the negatives, and how big of a roll this somewhat of an uncertainty here in the near term related to ITC is playing in terms of the negotiating process?

Well, I think most utilities, low serving entities in the U.S. under this RPS obligations, are negotiating. They are out in the market negotiating to procure renewable energy without in the event that the DTCs or ITCs aren't extended. So, I think the discussions are proceeding generally across the board. It is not like there is a freeze on discussions, because of the uncertainty concerning those tax benefits. As far as the tax percentage themselves, its hard to... its obviously hard to predict what will happen there but we don't have any knowledge that they don't have, we are monitoring it pretty closely, and we will just have to wait and see how it plays out.

Okay, that's great. Once again, congratulations on a great quarter and execution, guys.

Thanks.

We will take our next question from the line of Steven Chin with UBS. Your line is now open.

Hi, this is Jagdish on behalf of Steven, congratulations once again. I just wanted to find out you called out Spain, Italy and France and U.S. utilities of near term goals. What kind of geographical spilt would you expect in 2008, please?

Yeah. We don't really break it out geographically. I mean, we found it's pretty hard to predict that because we just don't have the granularity. And I think this project pipeline is somewhat for us break it out precisely. But we do see in general, there is lot of projects as you may know being deployed in Spain ahead of the extension potential extension of the feed-in tariff. So Spain is robust right now. Italy seems to be a functioning viable market at this point, France is earlier stage but we do have two French based companies and we see... we do see project pipeline beginning to build there. So I think it's tough to give you a lot of specificity on what those numbers would actually be.

Okay. Then, just a quick follow-up on that, you said that on the, cost per watt goes, since you lowered your cost per watt by about 12% in 2007 should we think that to be a reasonable goal for 2008?

No, I think if you look at our road map, in order to achieve $1.25 to $1 pricing capability, right, in the outer years which is in line with our good parity goal of $0.08 to $0.10 per kilowatt hour, that requires us to achieve cost per watt of about $0.65 to $0.70 and that's our long term goal. So we believe we are on track for the road map.

Thank you.

We'll take our next question from the line of Adam Hinckley with Oppenheimer Capital. Your line is now open.

Hi good morning. Just a quick question Jens, has there been any positive revisions with your existing customers for the amount contracted for 2008?

I'm not sure whether I get your question Adam, can you may be rephrase that?

I believe at the Analyst Day, you said that there was about 319 megawatts for 2008 which is under the take-or-pay agreements, have there been any amendments to make that any higher?

So, I mean we generally as, you know, we have the ability right to exercise certain put options and so based on how product pipelines evolve and how global demand evolves we do exercise those options, and I will discuss with those customers.

Okay, then I guess, if with the expectation of what's not under contracts for fix price take-or-pay agreements, on the euro basis what's the underlying assumption through 2008, for ASPs?

So as you know I don't think we ever really guided around the ASPs right. Some of that un-located volume, I think as we stated in prior calls was not used opportunistically, its used strategically to see if new markets and as Mike mentioned in his comments, the focus here is the U.S., is the U.S. utility market right, which may have more... and does have more challenging economics right, and could possibly happen at lower pricing point of the contract.

So then for, existing DT agreements, how many megawatts of commitments do they have from other module suppliers and how much would you be internally supplying them, can you provide any color on that?

As I mentioned, I mean if you look at right now, the impact of First Solar Electric on 2008, right is immaterial and the remaining pipeline that we took over is small and module supply have been secured for those projects.

Will take our next question from the line Colin Rusch with Broadpoint Capital. Your line is now open.

Good morning, gentlemen and congratulations on the continued phenomenal execution. My questions about price elasticity in the U.S. utility market, maybe a little bit too early for you guys to have real hard data on this but how are you thinking about elasticity in the market, are you looking at RPS requirements post the market, price reference and if you could give me a little bit more... little bit of guidance on how to frame that?

Well, in general in risk market segment, our offering is competing against all other renewable energy alternatives. So we are not running the gamut, so you are going to have to be at a price that's competitive with non-PV technologies. And in general, things are evaluated for lease costs and best fit. So that's a broad enough criteria to allow some consideration for time and date generation of peak offsets and that sort of thing. So, it wouldn't be a straight comparison to wind generation for example because we are more peaking solution but that is the competitive universe and I don't think we really know the answer until some large projects are under firm contract and have been approved by the relevant regulatory commissions. So we are little ways away from having the kind of data I think that we all would like to have.

And then and going over to French market, if the EU decides to define Nuclear Energy as not clean energy for its 2020 targets, have you guys done a preliminary assessment on what the market opportunities would be in France for PV if they weren't able to consider all those nuclear assets as clean energy?

No, we really haven't done that Colin. We are... our market analysis right now in Europe is more around the feed-in tariffs and what market opportunity and market structures would drive off of those and what's a reasonable base line to plan on in terms of availability of the structures. I think that next chapter that you're referring to is that's probably the more interesting question but we just haven't reached that yet.

Great, thanks so much and again congratulations.

Thanks.

We will take our next question from the line of Paul Leming with Soleil Securities. Your line is now open.

Good morning and congratulations on a great quarter. I have got a question for Mike, you've raised this specter of over-capacity couple of times on the call and I am wondering if you could just walk me through how you see that playing out over the next 12 to 18 months given the un-kept nature of the German market? Are you worried about a shortage of capital to buy and install systems as long as installed cost hit the levels needed to generate desired project returns? What, really is going to be the limiting factor on installation of modules of projects in Germany to absorb all the capacity that's coming?

That's a good question. I guess one question is where we see additional supplies coming into the market as a result of, for example Silicon feedstock constraints being alleviated and possibly removed. That's a scenario we looked at definitely as probability. But the timing of that is kind of hard to... at least for us to pin down because it is fairly empirical and you are getting announcements it seems like every week that bear on that question. So, whether that's 12 months to 18 months or close to 18 months, I think at least for sale it's a lot a little softer and little fuzzy on that but we think it's a distinct possibility that there would be a lot more volumes, crystalline silicon-based coming into the market. In terms of -- yeah, we're with the constraint the down strain from the modules to observe it. We have them looking at the adequacy of projects finance to continue to support the projects in Europe, given the issues in the credit markets in general. So far we haven't seen any issues there, and we haven't learnt anything that would suggest that it is right for you to be a constraint, but obviously that's a dynamic situation in itself. So, we got to keep an eye on that. There could be other, there could be other constraints with respect to, inverter supply or just personnel to install these things and a number of pieces of the value chain downstream from the module, when you get to return key install project that any number which could be a constraint depending on how rapidly, and how significantly volumes would come into the market. So, we haven't looked at that more generally, we look at that in terms of our own network of customers, their projects pipelines, what its going to take to deploy the volumes that we planned to put into the market. We have a pretty good feel around that. So, I didn't exactly answer your question but it's hard to pin that down because of the dynamics and the uncertainty around.

We will take our next question from the line of Adam Krop with Ardour Capital. Your line is now open.

Good morning.

Good morning, Adam.

Forgive me if the question has been answered already but my question is on gross margin, how should we be looking at it, can you give us a little bit more color on a quarter-by-quarter basis for 2008, given the dynamic for our declining ASPs and the ramp of Malaysia one.

I think if you look at it from a full working profile brought before you and I think 2007 actuarial are pretty good proxy here with respect to the profile. So, I mean in Q1 you get the hard impact obviously of the contractual price decline hitting your gross margins. And then since the first Malaysia plant essentially is coming up a year offset to what we have seen in Frankfurt/Oder, you should expect as we move into Q2 and we are starting to ramp, right before the start-up cost of being reclassified into cost of goods sold, that would reduce gross margins in that quarter and due to under-absorption of overhead. And then as you start to benefit from the capacity obviously as you go into Q3 you start to see recovery and then in Q4 we are talking about the same phenomenon again for the second Malaysia plant trying where you start to get the impact as a ramp on the margin.

Okay. That's helpful, thanks very much. And just switching gears, actually we have been looking at CapEx in 2009 and 2010, you have any guidance there?

No, really haven't. We really haven't guided that far out right and that obviously is subject to capacity decisions and so on.

We'll take our next question from the line of Michael Carboy with Signal Hill. Your line is now open.

Good morning, ladies and gentleman. You had mentioned earlier on the call that you felt it was easy to optimize around C&I installs rather than IOU installed, I was wondering if you could elaborate a little bit on when you think you would be able to achieve your bonus target on IOU installs rather than on commercial industrial plans?

Let's see if I can maybe recap a little bit. The long term target modal we have for 2010 to 2012 is really looking at the question as where could we price if we chose to and still be able to drive a minimum 20% return on net assts. And it's really a metric we use internally to drive continuous improvement and so the target is to be able to price at a $1.25 a watt, that's the blended ASP in 2010. It still drives this 20% RONA threshold and then move that down to $1 a watt by 2012. If we have the capability to do that, then the question would be, would we actually do that across the board. And that would really depend on the segments, the market segments and the pricing strategy which we would do on a segment-by-segment basis. But if we have the capability to do that, we think in the utility, the IOU markets for example there is likely to be pretty good demand elasticity around those price levels. And we don't know if we have to do that low or maybe have to be a little bit lower. I think that's going to have to play out, but it seems like reasonable place to put a stake in the ground and drive toward. So that's really how we are, when we speak about this pricing capability target, that's really how we are thinking about it.

We will take our next question from the line of Brian Gamble with Simmons and Company. Your line is now open.

All my questions have been answered. Thank you very much.

So operator I think we are running a little bit over on the call, there is I don't know how many questions you got left queued here. But we probably should be thinking about wrapping, wrapping the call up. Operator?

And there are no further questions at this time.

Very good, thank you everybody.

This concludes today's teleconference, you may disconnect at any time. Thank you and have a great day.