M-Flex announces unanticipated sequential decline in Q3 revenue and expects net income to decline sequentially to a loss
Jul 12, 2007
Multi-Fineline Electronix, Inc. (Nasdaq: MFLX) said that fiscal third quarter net sales unexpectedly declined from fiscal second quarter net sales, due to an ongoing decline in sales to its largest customer.
In its fiscal second quarter earnings teleconference, M-Flex said that, as in previous years, it expected sequential growth between the second and third fiscal quarters. At that time, the company believed that demand from its emerging customers would compensate for the ongoing softness in sales to its largest customer.
According to M-Flex's chairman and chief executive officer, Phil Harding, although sales to all customers other than the company's largest customer did show significant sequential growth of approximately 43 percent during the quarter, sales to the company's largest customer declined substantially more than expected. As a result, net sales decreased to $104.1 million as compared to fiscal second quarter net sales of $113.4 million. In addition, M-Flex expects that net income will decline sequentially from the second quarter to a net loss from operations for the third quarter, before an expected non- recurring charge to expense transaction costs related to the conditional offer by M-Flex (the "Offer") to acquire all of the outstanding shares of MFS Technology Ltd ("MFS").
Harding said that the company expects to incur a non-recurring charge in the fiscal third quarter of approximately $8 million related to expensing the deferred transaction costs from the Offer. M-Flex terminated the Offer in late June 2007, after WBL Corporation Limited ("WBL") announced that its shareholders had voted against tendering WBL's shares of MFS in the Offer and against voting WBL's M-Flex shares in favor of the Offer. Approval of the shareholders of WBL for the Offer was a pre-condition to M-Flex making the Offer.
M-Flex expects to report its complete financial results for the fiscal third quarter in early August.