FRANKFURT - SolarWorld, Germany's largest solar company by revenue, disappointed markets by giving a weak outlook as the sector's crisis finally hit the giant long believed to be invulnerable.

The company which makes everything from wafers to solar modules said on Thursday it planned only to exceed 2009 sales of 1.013 billion euros ($1.37 billion) in 2010, compared with the Thomson Reuters I/B/E/S forecast for 1.243 billion euros.

Its shares were down 3.91 percent at 1019 GMT, after falling as much as 7 percent earlier, and were underperforming the FTSE clean tech index which eased 0.53 percent.

The guidance is vague, the market is already expecting a revenue of clearly more than 1 billion for 2010. We believe that the results and the outlook clearly underline our 'sell' case, DZ Bank analyst Sven Kuerten wrote in a note.

Chief Executive Frank Asbeck's comment to Reuters signaling a slightly higher dividend for 2009 compared with 2008 -- when the company paid out 0.15 euro per share -- did not offset pressure on the stock.

Uncertainty has gripped most industry players mainly due to potential cuts for solar power incentives in Germany, the world's largest market for solar products.

Q-Cells, the world's No.4 solar cell maker, this week said that it was unable to give an outlook for the financial year, pointing to the market situation in Europe's largest economy Germany.

Norway's Renewable Energy Corp, one of SolarWorld's main rivals, also said that the first two quarters of 2010 would be challenging.

The German government plans to cut state-mandated incentives, called feed-in tariffs -- for rooftop solar power by 16 percent from July 1 and eliminate support for converted farmland, parliamentary sources told Reuters.

Incentive cuts in Germany mark the second blow to the sector within two years. It has suffered under a price slump for solar components caused by overcapacity, causing cell and module makers such as Q-Cells and Solon to pile up record losses.

SolarWorld, one of the few profitable German solar groups, has so far coped much better with the crisis because the producer is active in many parts of the solar chain, a key feature to offset pricing pressure in one area.

It said 2009 earnings before interest and tax (EBIT) came in at 151.8 million euros, below the 167 million euros that were expected by analysts according to Thomson Reuters I/B/E/S.

(Reporting by Christoph Steitz and Anneli Palmen; Editing by Sharon Lindores)