Investors headed for the exits on solar panel maker First Solar (NasdaqGS: FSLR) on Wednesday, causing the stock to fade 20% early in the day—a level it remained at until market close.

The reason? An early morning press release from First Solar saying the company is lowering its sales forecast for 2011. First Solar said it now expects sales of $2.8 billion to $2.9 billion on the year, down from its previous estimate of $3.0 billion to $3.3 billion. In addition, the company says it will lay off about 100 workers, or roughly 1.5% of its workforce.

According to First Solar, “The primary reason for the revised 2011 guidance is continued delays of certain projects in First Solar’s systems business due to weather and other factors.”

The stock is now down about 80% from its 52-week high of $175.49, a dismal performance that prompted Lindsey Bell of theStreet.com to name First Solar one of her five worst stocks of 2011. And things don’t look like they’re about to get better any time soon.

Bad Weather Just the Tip of the Iceberg for First Solar

In a November Investing Daily article, editor Elliott Gue took a close look at the prospects of First Solar and the solar-power industry as a whole. His assessment was bleak. Wrote Gue:

The solar-power industry’s woes extend beyond one company. The glowing reports about futuristic solar projects and green energy amount to meaningless blather. Predictably, some pundits have blamed Chinese companies for the industry’s recent ills. Here’s the truth: The speculative bubble in green-energy and clean-tech plays has burst, with solar power names bearing the brunt of the pain.

As Gue points out, the industry now faces two major problems: a glut of solar power equipment (which is driving down prices) and cuts to government subsidies, particularly in the troubled Eurozone, which has traditionally been friendly to solar power companies.

First Solar Layoffs “a Sign of Weakness”

As a result of these struggles, a number of solar companies have already gone bankrupt (including the high-profile case of Solyndra, which went under after it received a $500-million loan backed by the U.S. government).

Further down First Solar’s press release, Mike Ahearn, the company’s chairman and interim CEO, alluded to subsidy cuts when he said the company was recalibrating its business “to focus on building and serving sustainable markets rather than pursuing subsidized markets.”

Louis Bedigian of Benzinga.com picked up on the company’s job cuts in his analysis of the situation: “While 100 associates might not sound like many compared to the thousands that Wall Street banks have been laying off this season, that number is still significant enough to show a sign of weakness within First Solar, if only for the coming year.”

Bedigian was also highly critical of First Solar for providing few details on exactly how it plans to tackle its challenges: “I see very few noteworthy details in today’s announcements—just a lot of face-saving hyperbole that looks good on paper.”

Not Everyone Thinks the Solar-Power Party Is Over

Despite all the pessimism, Jesse Pichel, an analyst at Jefferies & Co., doesn’t think First Solar will suffer the same fate as Solyndra. Quoted in an article on CNNMoney, Pichel said: “First Solar has projects which are profitable and is not a bankruptcy risk near term in our view, but the future of the company will be determined by its ability to lower module costs and increase efficiency.” Jefferies is maintaining its Hold rating on the stock.

Pichel also points out that, unlike Solyndra, First Solar doesn’t have any government-backed loans. Judging by Wednesday’s decline, however, that may come as little comfort to the company’s investors.