updated 11/12/2010 1:26:47 PM ET 2010-11-12T18:26:47

Shares in STR Holdings Inc., which makes solar panels and also provides quality assurance testing to other manufacturers, fell sharply Friday after the company said that the personnel and infrastructure costs required to support the company's growth and operation had risen.

The company also said that its third-quarter net income and sales grew year-over-year. Although its third-quarter earnings fell short of analysts' expectations, its fourth-quarter forecast surpassed them.

Shares in STR Holdings Inc. fell $4.15, or 17 percent, to $20.37 in afternoon trading.

The Enfield, Conn. company earned $13.3 million, or 31 cents per share, in the period ended in September, compared with $7.9 million, or 21 cents per share, a year earlier.

Analysts, who typically exclude one-time items, were expecting earnings of 37 cents per share, according to Thomson Reuters.

Net sales jumped to $97.8 million from $67.3 million a year ago and topped the average analyst forecast of $92.4 million.

STR's growth in revenue was fueled by exploding solar panel sales, the company said in a statement. Net sales in this category rose 93 percent year-over-year, to $68.3 million from $35.4 million. The company noted particularly strong momentum in Asia, where sales of solar panels more than tripled.

On the other hand, the company's quality assurance business fell short of the company's expectations for the quarter. Revenue in this category fell to $29.5 million from $32 million, a drop that STR attributes to manufacturers making quality assurance less of a priority during the downturn.

For the fourth quarter, which ends Dec. 31, STR estimated net sales between $96 million and $100 million, and earnings per share between 34 cents and 38 cents. Analysts, as surveyed by Thomson Reuters, predict revenue of $89.5 million and earnings of 35 cents per share, excluding one-time items.

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