First Solar (NSDQ: FSLR) said it's cut production costs to 98 cents per watt.

The company announced the news after posting its fourth-quarter earnings Tuesday afternoon. The company saw a jump for its fourth-quarter and 2008 revenues and profits. But the news didn't cheer the investors, who sent the shares down after the company executives said the first-quarter revenue would likely be flat or lower. They didn't disclose any figures for the first quarter.

First Solar's shares dropped 12 percent to reach $120.77 per share in after-market trading.

The Tempe, Ariz.-based company, which makes thin-film solar panels using cadmium tellurium, has built a reputation for producing the cheapest panels in the industry. Manufacturing costs reached $1.08 per watt, the company executives said last October.

First Solar expects to more than double its manufacturing capacity this year to reach more than 1 gigawatt. The company began mass-producing panels in 2004, reaching a manufacturing capacity of more than 500 megawatts per year in 2008. The company has been building new factory lines in Malaysia.

Reaching the magical 1 gigawatt capacity would put in the company of China-based Suntech Power Holdings, which announced last month it had reached that capacity (see Suntech Boasts 1GW Capacity Amid Tough Times for Solar Market).

First Solar doubled its fourth-quarter net income to reach $132.8 million, or $1.61 per share, from $62.9 million, or $0.77 per share, from the year-ago quarter. Fourth-quarter revenue was $433.7 million, up from $200.8 million in the same quarter in 2007.

The company posted a net income of $348.3 million, or $4.24 per share, for 2008, compared with $158.4 million, or $2.03 per share, for 2007. The company tripled its 2008 revenue to reach $1.25 billion, from $504 million in 2007.

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