Wall Street thin-film solar darling First Solar has bought Turner Renewable Energy, CNN founder Ted Turner's solar-installation company, for about $34.4 million.

Turner Renewable Energy has operated under the name DT Solar since January, when Turner invested in the company, which has designed and built U.S. commercial solar projects since 2004.

The move makes First Solar (NSDQ: FSLR) the latest solar company to expand into different parts of the supply chain via an acquisition.

SunPower, which makes solar panels, last year bought solar integrator Powerlight, saying the combination could help bring costs down to compete with retail electricity rates.

Conergy subsidiary SunTechnics, a renewable-energy installer, also bought Aztec, a solar water-heating company, in May.

First Solar, which makes panels using cadmium telluride instead of from more expensive silicon, is the largest thin-film solar producer in the world.

First Solar also has been an investor favorite, with shares doubling since September after the company announced plans to expand production and posted dazzling third-quarter earnings (see Thin-Film Solar Production to Leap Forward).

First Solar even was blamed for inflating investor expectations for other solar companies (see Thin-Film Solar Gets Another Boost, JA Solar Gets No Reward From Investors and Trina Solar Shares Fall 20% on 3Q).

Colin Rusch, an analyst for Broadpoint Capital, said in a research note Monday that First Solar's purchase only strengthens the company.

With Turner Renewable Energy in hand, First Solar will go after "low-hanging fruit" -- sales in energy-intensive industry areas that face strict renewable energy standards and high energy prices, he said.

"First Solar will be able to set sales prices well below those of its competitors," he wrote, adding that the company could drop prices below $4 per watt and still maintain a gross margin in the "mid-30" percent range.

But not everyone thinks so-called "vertical integration" -- expanding to multiple parts of the supply chain -- is the way to go. Some entrepreneurs have questioned how much one company should take on, saying it's too difficult to perfect the whole solar chain at once (see Solar Companies Debate Doing Everything).

Perhaps that's why Wall Street wasn't overenthused with the deal, dropping First Solar's stock $9.93, or 3.34 percent, to $229.22 per share.

But Nick Perry, an equity analyst for Schaeffer's Investment Research who writes for the Trading Floor Blog, said industry watchers shouldn't read too much into Wall Street's negative reaction.

Seeing a company's shares drop after announcing a purchase "is fairly normal behavior," especially after a big stock run-up, he said.

But despite Wall Street's recent love for First Solar, Perry warned that he does expect First Solar to experience stock volatility in the future. "At some point, expectations may get ahead of themselves," he said.

Morningstar analysts also said they see a potential Achilles heel for the company.

Germany is expected to significantly lower its solar subsidies, and that could be a problem because the country accounted for 96 percent of First Solar's sales in 2006, according to a research note Morningstar published in mid-November. The firm also expects more competitors to enter the market, spawning aggressive competition.

Still, First Solar has visible staying power, the firm wrote.

Perry agreed. "I like the longer-term uptrend and view the company as one of the leaders of this sector," he said.