Updated: First Solar CEO Rob Gillette Out, Stock Tumbles

Company founder, Mike Ahearn, to serve as interim CEO. Layoffs ahead?

Eric Wesoff October 25, 2011

Eric Wesoff

Editor-at-Large
Greentech Media

Eric Wesoff is Editor-at-Large at Greentech Media. Prior to joining GTM, Eric Wesoff founded Sage Marketing Partners in 2000 to provide sales and marketing-consulting services to venture-capital firms and their portfolio companies in the alternative energy and telecommunications sectors. Mr. Wesoff has become a well-known, respected authority and speaker in these fields.

His expertise covers solar power, fuel cells, biofuels and advanced batteries. His strengths are in market research and analysis, business development and due diligence for investors. He frequently consults for energy startups and Silicon Valley's premier venture capitalists.

Just last week I watched a confident Robert Gillette speak at Solar Power International in Dallas about First Solar's successes and job creation.

Today he announced that he is no longer serving as CEO of the solar industry's largest PV module company by market share, First Solar (NASDAQ: FSLR). Largest by market cap for the time being.

The company's founder, Mike Ahearn, will serve as interim Chief Executive Officer.

Credit Suisse notes that "today’s abrupt announcement is disconcerting, we have never quite seen a CEO departure announced in this manner in our universe."

Lazard Capital has downgraded the stock to "neutral" from "buy."

Deutsche Bank cites "reports indicated that negotiations of sale of Topaz project to Enbridge fell through."

Citi notes that "Mr. Gillette has been CEO since Sept. ’09 and since that time, only one of the top 6 corporate officers listed in the 2008 10K (the General Counsel) remains at the company, highlighting the significant management overhaul the past several years. Layoff may be coming – Our work suggests FSLR may be facing a layoff of up to 10% owing to the reality that it may have to run factories at less than full utilization during the next several Qs. This, in part, may have led to the management change."

Morgan Stanley notes, "We believe that Robert Gillette's unexpected departure is likely a troubling sign of things to come. Unfortunately, the company does not plan to give out any details about the departure until it reports Q3 results on November 3rd. This announcement is a complete surprise to us given that Gillette was upbeat at last week's Solar Power International Conference and was planning to meet with investors with all leading members of management on November 15th. We believe the uncertainty regarding the departure and the abrupt nature of the announcement will lead to negative speculation regarding the company's fundamentals.FSLR's customers may be currently struggling. A call that we had with a leading European trader today suggested that several downstream solar companies, which may include FSLR customers, have violated their bank covenants."

The news sent shares of First Solar down more than 24.5 percent on Tuesday to $43.22.

First Solar is headquartered in the U.S. with global manufacturing sites. The Walton family were investors in the company early in its existence.

Last week saw a claim by SolarWorld that Chinese module firms are dumping product in the U.S.

First Solar announces it's third quarter earnings next week. It should be an interesting call.