Shares of the company, which posted a wider quarterly net loss, fell 7 percent in extended trading.
The solar industry is wrestling with fierce competition, oversupply and falling subsidies for solar energy, a combination that has already undermined large solar panel makers such as Fremont-based Solyndra and Germany's Solon.
Solar module prices fell more than 40 percent last year.
SunPower, whose overall manufacturing cost declined by more than 25 percent in 2012, expects a loss of 60 and 85 cents per share for the first quarter, its ninth straight quarterly loss.
SunPower's results and forecast show that the solar market, especially in Europe, is not improving, but the company is seeking to offset the slowdown with better cost management.
"Looking to 2013, we expect to increase profitability and drive free cash flow for the year as we leverage our global model," Chief Financial Officer Charles Boynton said in a conference call with analysts.
SunPower, majority-owned by French oil giant Total, said it expects to reduce operating
The company expects first-quarter non-GAAP gross margin of 18 percent to 22 percent. The company reported gross margin of 18.7 percent for the fourth quarter.
"I have been hearing the SunPower story for a long time ... that everything is going to get better, but it doesn't get better," Morningstar analyst Stephen Simko said.
The company's stock has gained close to 50 percent so far this year, mainly on news that it sold two solar projects in California to a company controlled by Warren Buffett's Berkshire Hathaway.
The company's shares closed at $8.40 on Thursday on Nasdaq. Thomson Reuters StarMine puts an intrinsic value of $4.51 on the stock, based on expected growth rates over the next decade.
SunPower's net loss widened to $144.8 million, or $1.22 per share, from $93 million, or 94 cents per share, a year ago. Excluding items, the company earned 18 cents per share. Revenue rose 8 percent to $678.5 million.