Source: Exar.

What: Shares of Exar (NYSE:EXAR) fell 17.4% on Tuesday, burdened by a combination of weak preliminary earnings, the sudden resignation of CEO Louis DiNardo, and at least two instant analyst downgrades.

So what: Let's start with the easy pickings. Exar released a limited look at its second-quarter results a few weeks early. Non-GAAP sales should land somewhere near $37 million, boiling down to adjusted earnings of $0.06 per share. Both of these figures are just below the current Street view, and the company didn't offer any color commentary on what's driving the results.

Departing CEO Louis DiNardo has held Exar's reins since 2012, stepping in from a private equity management background. Only 38% of Exar employees sharing their opinion on business review site Glassdoor would say that they approve of DiNardo, making him a rather unpopular chief executive.

Analyst firm B. Riley lowered its Exar rating to "neutral," citing the negative earnings pre-release and the loss of its chief executive. Likewise, Cowen dropped the stock to a neutral "market perform" rating, pointing to the same catalysts that forced B. Riley's hand.

Now what: Long story short, many investors had been hoping that Exar would jump aboard the bandwagon of recent semiconductor buyouts. The company works in many of the same areas where PMC-Sierra (NASDAQ: PMCS) found two interested suitors, and Exar could have sparked a similar bidding war under the right circumstances.

But these soft preliminary results show that things are not quite working out inside Exar. DiNardo's departure has only thrown more ice water on the possibility of a quick buyout.

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

So it's back to square one for Exar shareholders who had been hoping for an easy exit. The stock has now lost 41% of its value over the last year, punctuated by another disappointing quarterly report in early August.

New CEO Richard Leza steps in from the boardroom, where he has served as Exar's chairman since 2006. He will continue to hold the chairman's title, pulling double duty until a suitable replacement has been found.

Leza or his appointed successor might get this troubled business back on track, but turnarounds are never easy. That's why analyst firms are throwing their hands up and walking away from the stock right now.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.