ANAHEIM, CA -- MFlex today said preliminary fourth-quarter net sales would be approximately $169 million, slightly below previous company guidance due to lower demand for smartphones.

Gross margin for the period ended Dec. 31 is expected to be 11.3% to 11.8%, within company guidance.

The company said the coming quarter would be difficult and implied cost reductions. The company is a major supplier to Apple, which market watchers say is experiencing softer than expected demand for its latest iPhone 6.

MFlex expects to provide complete financial results and forecasts on Feb. 4.

Reza Meshgin, chief executive, said: "Our fourth-quarter sales results were impacted by softness in our smartphone segment. Notwithstanding the lower than anticipated demand, we had solid operational performance and proactively controlled our costs, and expect our sixth consecutive quarter of strong profitability. We also successfully managed our working capital, generating strong operating cash flows of approximately $51 million, and growing our cash balance to $214 million, an all-time record for MFlex."

"Looking ahead to first-quarter 2016, which is typically our seasonally slower period, we expect revenue to decline approximately 30% sequentially. Although we will continue to work on cost improvements, we also anticipate a sequential decline in gross margin based on the lower anticipated revenues and overhead absorption, resulting in approximately break-even or slightly negative net earnings for first quarter 2016. Looking further ahead, we anticipate a rebound in net sales in the second half of 2016, which we believe will drive meaningful year-over-year sales growth for full year 2016."

MFlex is a top 50 bare board fabricator and contract assembler.

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