Solar Power Inc.'s (SOPW) second-quarter loss narrowed as the company reported lower expenses, revenue growth and margin improvement.

Chief Executive Steve Kircher said the quarter began to show improvements in the solar market, although a lack of credit was making solar projects requiring financing difficult to complete.

Based on the company's first-half results, Solar Power lowered its full-year revenue target to $60 million to $75 million, from its May view of $75.8 million to $80.5 million.

Solar companies have been hurt in recent quarters on falling demand as commodity prices crashed, lessening the drive toward alternative energy sources. Founded in 2005, Solar Power, a smaller player in the sector, said it expects revenue to rise this year in both commercial and residential channels due to U.S. solar incentives and new financing programs.

The manufacturer of photovoltaic modules reported a loss of $1.6 million, or 4 cents a share, compared with a year-earlier loss of $1.9 million, or 5 cents a share. The company hasn't reported a profitable quarter since going public in 2007.

Net sales climbed 3.7% to $10.4 million.

Gross margin rose to 14.9% from 13.8% as operating expenses fell 4.5% to $3.2 million.

Solar Power serves U.S. small- and mid-sized business and residential markets. It also sells its products in Europe and Asia.

Shares were down 1.8% at $1.11 in after-hours trading. The stock has more than doubled this year, but is still far off the all-time high of $4.60, which was reached shortly after the initial public offering.