First Solar Inc's board ousted CEO Rob Gillette, replacing him on an interim basis with Chairman Mike Ahearn while the solar panel maker searches for a new leader to steer it through a treacherous time in the industry.
First Solar gave no reason for Gillette's departure, which intensified fears that its performance has faltered as it faces increasingly cutthroat competition.
Shares in the world's most valuable solar company fell more than 25 percent on Tuesday to their lowest level since early 2007.
"Whenever I see a CEO change that's rather abrupt, particularly when it comes preceding earnings, I generally expect that there is bad news coming," Cantor Fitzgerald analyst Dale Pfau said.
First Solar will report third-quarter earnings on November 3.
Prices for the photovoltaic panels that turn sunlight into electricity have plummeted more than 30 percent this year, as key markets in Europe cut subsidies for renewable energy at the same time that panel manufacturers were ramping up production capacity.
The turmoil has wiped out profits for many solar companies, including First Solar.
The Tempe, Arizona company, has long been considered a standout in the industry because its cadmium telluride panels are cheaper to make than the silicon-based panels that dominate the market.
The company's share price peaked at $317 in early 2008, but traded as low as $42.50 after the news on Tuesday.
Many investors fear that First Solar's position as the industry's low-cost leader is under threat as the price of polysilicon falls, making panels made from it increasingly more competitive with First Solar's offering, which is less efficient at transforming sunlight into electricity.
"First Solar is going to be under constant pressure as the raw material costs continue to fall for everyone but them," said Wunderlich Securities analyst Theo O'Neill.
On Monday, J.P. Morgan cuts its price target on First Solar stock by more than half, to $50 from $105.
In a brief statement, First Solar said its board had formed a search committee to look for Gillette's replacement.
Gillette joined First Solar as CEO on October 1, 2009 from Honeywell Aerospace, where he was CEO. He replaced Ahearn in the company's top job at that time.
During his tenure, First Solar's market value fell more than 65 percent as a glut of solar panels squeezed prices and margins for the entire industry.
Several high-profile management changes also happened on Gillette's watch, including the departures of Jens Meyerhoff, the head of its utility systems business and a former chief financial officer, and Bruce Sohn, president of operations.
Those departures, and others, raised some concern among analysts who had seen Sohn and Meyerhoff as potential successors to Gillette.
First Solar had invited investors and analysts to a meet-and-greet cocktail hour with the company's management in New York on November 15, according to Avian Securities analyst Mark Bachman. The invitation listed nine executives from the company who would be there, but did not include Gillette.
"Maybe that should have been a sign," Bachman said.
As recently as last Wednesday, Gillette participated in a news conference at a major solar industry trade show in Dallas, though he declined to speak to reporters individually.
Some analysts said the dramatic drop in First Solar's share price in recent months -- it is down 76 percent since February -- could make the company attractive as an acquisition target.
"It certainly is more attractive as a takeover target at these levels," said Paul Clegg, an analyst with Mizuho Securities USA.
First Solar's stock has been a target for short sellers, who benefit as a stock declines. They borrow shares and sell them with the expectation of buying them, or covering their shorts, at a lower price.
In May of this year, famed short seller James Chanos said he was betting that shares in First Solar would fall.