Trina Solar (NYSE: TSL) has just announced updated guidance for its second quarter that looks downright ugly, making its rosy outlook for the rest of the year even stranger, possibly signalling a bottom for the struggling solar sector in its worst-ever downturn. Just days before reporting its results, Trina has told the market it expects its unit sales to come in around 10 percent below its previous guidance, while margins will miss previous guidance by an even sharper 20 percent. (company announcement) But what's decidedly odd here is that the company is sticking to its previous full-year guidance for 65-70 percent shipment growth on the back of a sharp turnaround in the second half of the year. The conflicting news initially spooked investors, who sold off Trina shares but then later started buy, causing the company's stock to end down a modest 1.4 percent on Tuesday, well ahead of much bigger losses for the broader indexes. The unusual second-quarter guidance looks even stranger in light of much more positive second-quarter guidance given a day later by rival Yingli (NYSE: YGE), which said its results will come in at or higher than previous forecasts (company announcement). I'm going to be a bit cynical here and note that Trina was one of two companies whose audit committee chairmen suddenly resigned last month (previous post), which hinted at potential accounting issues within the firm. That said, Trina's sudden sharp shortfall in quarterly results looks suspiciously like part of an effort to quietly cover up accounting issues that need to be "resolved". If that's the case, then the company should be commended on the one hand for resolving those issues, but also criticized for the way in which it did so. Regardless, investors are clearly focused on the future, which includes fresh incentives from Beijing for building new solar power plants (previous post) and a possible pick-up in demand from other global markets. Still, I would be wary of Trina's stock for the short term, even as the broader solar sector appears on the cusp of a comeback.

Bottom line: The solar sector's downturn may have bottomed out in the second quarter, but look for continued uncertainty around Trina following the resignation of its audit committee chairman.