IRVINE, CA -- Flex circuit maker M-Flex today guided for lower than expected sales for its fiscal second quarter ended March 31.

For the period, the printed circuit board manufacturer expects net sales of approximately $174 million, below the previous guidance of $180 million to $200 million. The company also expects to take an $11 million charge to for unusable components and uncertainty in near-term demand forecasts.

Gross margin during the period is expected to be -2.7%, before the impact of the anticipated inventory write-down, in line with expectations. Including the inventory write-down, the GAAP gross margin is expected to be -8.9%.

Chief executive Reza Meshgin said, "During the second quarter, we scaled back production as planned, and worked down $50 million in inventory. This enabled us to generate strong cash flow bringing our cash balance to about $130 million, in spite of very difficult market conditions. This challenging period was unfortunately exacerbated by the need to write-down inventories due to reasons unrelated to operational or quality performance, as well as further demand softening during the quarter. While we are pursuing remedies for the unusable components, we believe it may be prudent to take this charge to write-down finished goods inventory at this time."

Meshgin guided for similar sales and approximately breakeven gross margin during its fiscal third quarter, followed by a "significant rebound" in revenue and profitability in the fourth quarter and into fiscal 2014.

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