* Sees Q1 rev $310-$330 mln vs est. $341.8 mln
* Q4 earnings $0.69/ADS, matches estimates
* Q4 rev $386.45 mln vs est $365.67 mln
* Sees Q1 gross profit margin at 30-32 pct
* Shares tank 17 pct to nearly 2-month low (Recasts; Updates share)
By Swetha Gopinath and Vaishnavi Bala
BANGALORE, March 1 (Reuters) - ReneSola Ltd reckons it might lose market share to low-cost wafer companies as the solar market shrinks on the back of declining subsidies in top consumer Europe.
ReneSola shares fell 17 percent to $9.20, their lowest in nearly two months, making them the second-biggest loser on the New York Stock Exchange on Tuesday. They later clawed back to $9.42, down 15 percent. The WilderHill Clean Energy index eased 1.12 percent.
Italy and France are expected to follow in the footsteps of Germany by slashing incentives for solar power, a move that is likely to hammer the industry that relies on such subsidies to better compete with traditional energy producers.
However, contrary to others, ReneSola still expects Italy to contribute 20-25 percent to its 2011 shipments.
ReneSola -- whose customers include solar companies such as Canadian Solar , JA Solar , Suntech and Solarfun Power Holdings -- will likely see a drop in third-party wafer demand as vendors look to ramp up their in-house capacity to cut costs.
"In 2011, we expect to face increased market competition on additional solar capacities that had been added," ReneSola Chief Financial Officer Julia Xu said.
GCL Poly , which in December won a long-term supply contract from Solarfun , is seen as the biggest competitor for ReneSola.
Wafer production is expected to remain flat in the first quarter, executives at ReneSola -- whose catchline is "Inspired by the Sun" -- said on a conference call, adding that capacity additions will not be completed until the second quarter.
ReneSola sees January-March revenue of $310-$330 million, lower than estimates, as shipments are expected to slip to 320-330 MW from 349.4 MW in the fourth quarter.
It posted a profit of 69 cents per American depository share in the fourth quarter, in line with estimates. (Reporting by Swetha Gopinath and Vaishnavi Bala; Editing by Joyjeet Das)